PETALING JAYA: YTL Hospitality real estate investment trust (REIT), the owner of hotel properties such as the JW Marriott in Kuala Lumpur and Pangkor Laut Resort, can expect dividend growth from the scheduled rise in rentals within master leases as well as earnings from new hotels, CGS International (CGSI) Research says.
The research house, which initiated coverage on the REIT with an “add” call and target price of RM1.18, said valuations appear undemanding, given the market consensus for a dividend yield of 7.8% and financial year ended June 30, 2026 (FY26) price-to-book value (PBV) of 0.06 times versus peers’ 7.2% yield and PBV of 0.72 times.
It noted that a combination of defensive yields and visible FY26 to FY28 dividend growth, underpinned by a portfolio of premium hospitality assets strategically located across Malaysia, Australia and Japan, appears compelling.
The dividend – representing a 4.3% yield spread against 10-year Malaysia Govern-ment Securities – may narrow, given a strengthening earnings profile further supported by improving tourism outlook due to Visit Malaysia 2026, scheduled rental escalations, and incremental contributions from newly developed assets.
It estimates the scheduled rise in rentals and incremental earnings from the newly developed AC Hotel Puchong and Moxy Niseko to collectively bring an additional annual net property income (NPI) of RM42.5mil across FY26 to FY28, comprising 14% of its FY26 NPI projection and supporting a dividend compounded average growth rate of 8.3% over three years.
It pointed out that investor concerns over limited rental growth and earnings volatility from Australian assets due to occupancy, room rate and foreign exchange fluctuations overlook the REIT’s improving growth profile, which includes potential sponsor asset injections while master leases continue to provide resilient earnings.
CGSI Research sees room for a lower valuation discount on visibility from investor gains coming from the dividend growth trajectory and the value of the REIT’s premium hospitality assets.
“Beyond this, we believe further sponsor asset injections remain a key re-rating catalyst, with an estimated 18 hotels (with over 2,000 rooms) available for potential acquisition, which could accelerate FY26 to FY28 dividend per unit growth,” it said.
