PETALING JAYA: Sunway Real Estate Investment Trust
’s (REIT) retail business is expected to keep the company’s earnings stable amid headwinds for the hotel business.
Analysts have largely kept a cautious tone on the REIT’s outlook following the release of first quarter ended March 31, 2026 (1Q26) results on Wednesday that was in line with market expectations.
CGS International (CGSI) Research, which has reiterated a “hold” call on the stock with an unchanged target price of RM2.45, said the retail segment remained the key performance driver in 1Q26.
The research house said this was underpinned by resilient tenant sales and footfall, with occupancy improving to 98% from 97% in 4Q25 alongside healthy sales per sq ft growth of 6% year-on-year.
Analysts were cautious over the hotel segment’s outlook, with Kenanga Research noting that the anticipated spillover from Visit Malaysia Year 2026 may partially be affected by high flight ticket prices due to the Middle East conflict.
It said the planned injection of Sunway Velocity Mall by Sunway Bhd into the REIT in 2027 provides an upside valuation.
It has raised the target price (TP) to RM2.45 from RM2.17 based on gross dividend per unit of 12.5 sen and a yield of 5.1%.
The stock has also been upgraded to a “market perform”.
MBSB Research has maintained a “neutral” call at a target price of RM2.39, while also maintaining earnings forecast for the financial year ending Dec 31, 2026 (FY26) to FY28.
It sees stable earnings outlook for the retail business as most footfall comes from domestic shoppers but a less robust outlook for tourist arrivals may impact the hotel business.
It pointed to net property income from the retail segment climbing 12.5% in 1Q26 quarter-on-quarter (q-o-q) supported by festive shopping while net property income of the hotel segment was down 59% q-o-q due to Ramadhan.
“We hold a cautious stance on the hotel segment outlook as the geopolitical tensions in the Middle East is expected to weigh on travel demand,” it added.
HLIB Research, which has maintained a “hold” call on the stock, but raised the target price to RM2.48 from RM2.40, said core net profit forecasts for FY26 and FY27 has been raised by 8% and 7% respectively while it estimates 4% growth for FY28.
“With gearing already at the upper side at 40.2%, we expect FY26 growth to be driven mainly by organic means, with capital expenditure focused on asset enhancement initiatives and ongoing development projects.
These are expected to contribute more meaningfully from FY28 onwards, particularly from the new Seberang Jaya hotel and Sunway Pier Mall,” it said.
CIMB Securities Research has also maintained a “hold” call but raised the target price to RM2.68 from RM2.14 to reflect the higher earnings forecast for FY26 and FY27 of 11% to 12%.
While expecting lower q-o-q earnings in 2Q26 from the Middle East conflict and the absence of festivities, it said this would be partly mitigated by lower financing costs following recent refinancing.
