Saturday, August 24, 2013

KLCC Property Holdings : 1H13 earnings in line but lower dividends (CIMB)

KLCC Property Holdings
Current RM6.12
Target RM7.00
1H13 earnings in line but lower dividends

 KLCCP's 1H13 core net profit of RM274.2m was in line with our estimate, at 45% of our full-year forecast. However, 1H dividend per share of 12 sen accounted for only 38% of our full-year forecast.

We cut our DDM-based target price to RM7.00 from RM8.00, after reducing our dividend payout assumptions, while keeping our WACC at 7.1%. We maintain our Outperform call, with the injection of KLCCP's other assets such as Menara Dayabumi into the REIT as a re-rating catalyst. The injection will also lower taxes and improve earnings.

1H13 dividend of 11.95 sen
In 2Q13, KLCCP declared a dividend per share of 7.45 sen, which implies a dividend payout ratio of 72% for the group. This brings total dividend per share in 1H13 to 11.95 sen, which accounts for only 38% of our full-year DPS assumption. Thus, we lower our dividend payout assumption for the group to 85% from 95%. Our initial dividend payout assumption was based on the premise that the group will pay more than 95% of its FY13 earnings as dividends, as opposed to just the REIT.

2Q13 earnings review
2Q13 revenue rose by 9.4% yoy, driven mainly by the higher revenue of its property segment. The property segment’s revenue was up 16.6% yoy due to the renewal of the Petronas Twin Towers’ triple net lease for another 15 years beginning 1 Oct 2012. The retail division’s revenue increased 11.7% yoy due to the improved rental and occupancy rates.

REIT structure takes effect
KLCCP's 1H13 core earnings only formed 45% of our full-year forecast. However, we expect stronger earnings in 2H13, underpinned by the lower tax rates once the stapled REIT structure takes full effect in 2H13.

Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 22/08/13

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