PETALING JAYA: KLCCP Stapled Group’s Suria KLCC tenant sales continue to see negative growth led by a slowdown in luxury spending, which will likely persist in the immediate term, says Kenanga Research.
This had led to a lower rental reversion of mid single-digit, from high single-digit in the preceding year for its renewals in Suria KLCC Mall, said the research house.
Despite that, the group’s long-term fundamentals are intact as growth in retail sales of its non-luxury segments such as food and beverage, leisure fashion showeds that spending remained supportive.
The refurbishment of Mandarin Oriental’s ballroom is expected to help drive the performance of the hotel.
The research house remained positive about the continuous robust tourist arrivals and about 80% of the hotel’s guests are foreign tourists.
Its financial year 2025 (FY25) earnings forecast is adjusted down 1% following model updates.
The research house has a “market perform” outlook for the stock.
Kenanga Research has kept its target price at RM8.52 a share based on FY26 net dividend per share assumption of 46.9 sen. This is against an unchanged yield spread of 1.75%.
Its distribution is based on a 92% payout, in line with its historical averages.
KLCCP Stapled Group consists of KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust.
MIDF Research said the group’s higher earnings from the hotel division should help cushion the expected weaker earnings of the retail division as the second quarter is typically a low season.
Its office division should remain stable due to long-term lease agreement
Kenanga Research liked KLCCP for its prime asset portfolio, anchored by its iconic office towers in the KLCC area and Suria KLCC Mall.
The group is likely able to sustain a steady income stream moving forward, according to the research house.
The group’s year-on-year first quarter FY25 (1Q25) revenue was largely flattish, mainly due to weaker revenue from Mandarin Oriental as the hotel’s occupancy rate was lower at 54% from 58% in the 1Q24.
