PETALING JAYA: While maintaining a “neutral” stance on the real estate investment trust (REITs) sector, Kenanga Research says it expects the sector’s stability to gain appeal among investors amid recent market volatility fuelled by ongoing US tariffs and global trade tensions.
The research house said this is because REITs have remained largely unscathed in both their underlying business and valuations.
“Still, we see selective opportunities following recent market volatility driven by the ongoing US tariff headlines and global trade uncertainties, with REITs remaining largely unscathed due to their resilient business model, while offering decent dividend payouts of 5% to 7.5% across the sector,” the research house said.
Noting that the upside for certain large-cap names in the sector may have been adequately priced into their share prices, Kenanga Research said it continued to see opportunities in selective REITs.
“Our current top picks are Sunway Real Estate Investment Trust
(Sun-REIT) underpinned by its earnings expansion from the Sunway Pyramid and Sunway Carnival malls.
“We also highlight Capitaland Malaysia Trust (CLMT) as we believe its recent share price pull-back is unwarranted after meeting with the new management, backed by its above-average 7% plus dividend yield,” the research house said.
Meanwhile, CIMB Research said REITs are set to perform well this year, offering strong distribution yields of between 5% and 9.1% amid market volatility driven by ongoing trade tensions that increased investor caution.
The research house said, as of April 2, Malaysian REITs had outperformed the FBM KLCI on a year-to-date basis, registering a 1.8% drop year-on-year (y-o-y), compared with the FBM KLCI’s y-o-y decline of 7%.
It has “buy” calls on both Axis-REIT and Sunway-REIT with target prices of RM2.13 and RM2.11 a share, respectively.
