PETALING JAYA: Analysts have raised their earnings forecasts for IGB Real Estate Investment Trust
(IGB-REIT) following a stronger-than-expected first quarter ended March 31, 2026 (1Q26) performance from the trust.
Hong Leong Investment Bank (HLIB) Research stated that IGB-REIT’s 1Q26 core net profit came in at RM168mil, which accounted for 30% of its full-year forecast and 29% of consensus estimates.
The outperformance was largely driven by stronger-than-expected net property income margins from its Mid Valley Southkey (MVS) asset, which was acquired on Nov 20, 2025, as well as positive rental reversions across its portfolio.
“With the positive results surprise, we raise our financial year ending Dec 31, 2026 (FY26) and FY27 earnings forecast by 10.7% and 10.5%, respectively,” it said.
However, the research house added that IGB-REIT has historically delivered a slightly stronger first quarter, typically contributing about 26% of full-year revenue.
“This quarter was no exception in our view, driven by Chinese New Year and Hari Raya falling within the same quarter,” it noted.
Looking ahead, HLIB Research expects 2Q26 to be slightly softer as the festive tailwind normalises.
For FY26, the research house forecast earnings growth of 42% for IGB-REIT, underpinned by the full-year contributions from MVS and mid-single digit rental reversion across its portfolio, in line with management guidance.
“Earnings per unit growth is expected to be more modest at 20%, reflecting the enlarged unit base from the 699 million new units issued as part of the MVS acquisition.”
Kenanga Research also revised its earnings forecasts higher for IGB-REIT’s FY26 and FY27 by 3% each, citing above-average rental reversions at MVS “at high-single-digit versus the group’s average of mid-single-digit”.
It added that strong rental reversions at Mid Valley Megamall and The Gardens Mall are expected to persist, supported by stable retail spending.
Kenanga Research noted that the acquisition of MVS is expected to enhance its dividend per unit (DPU) by up to 15% in FY26, while providing geographical diversification beyond IGB-REIT’s Kuala Lumpur-centric portfolio and exposure to Johor’s growing economy.
“With the full incorporation of MVS reflected in the 1Q26 results, we note that the mall remains relatively young and continues to offer room for above-average rental reversions over the medium term,” it said.
As a result, Kenanga Research lowered its yield spread assumption from 2.5% to 2%, raising its target price (TP) for the trust to RM2.81 a unit from RM2.50, based on FY26 forecast DPU of 15.4 sen and a revised target yield of 5.5%.
It maintained its “market perform” call, saying IGB-REIT’s fundamentals remained intact, supported by a resilient portfolio, high occupancy rates and broad tenant exposure, with additional upside from MVS.
HLIB Research maintained a “hold” call on the trust with a higher TP of RM2.69 a unit, up from RM2.43, based on an unchanged target yield of 5.3% on FY26 DPU.
“Despite the earnings upgrade, we believe the recent surge in unit price has left it fairly valued at current levels,” it said.
