Saturday, October 26, 2013


Current RM1.22
Target RM1.44
IGB REIT delivers

 9M13 core net profit of RM153.9m was above expectations, accounting for 78% of our full-year estimate. However, despite the positive results, we believe there is little to cheer about moving forward given the lack of acquisition news flow for the stock.

We raise our FY13-15 estimates by 2-7% after we revise upwards our core rental assumptions given the positive 3Q13 results. However, our DDM-based target price is revised downwards to RM1.44 (from RM1.59after revising our cost of equity assumptions. We downgrade our call on the stock from Outperform to Neutral) as we do not see any potential re-rating catalysts for IGB REIT.

DPU of 1.83 sen for 3Q13
IGB REIT announced a DPU of 1.83 sen for 3Q13. This brings 9M13 DPU to 5.3 sen, in line with our full-year target of 6.7 sen.

Net property income up 4.4% qoq
3Q13 revenues increased by 0.9% qoq, driven mainly by higher-percentage rents. Net property income grew faster due to lower property costs during the quarter.

Downgrade to Neutral
As highlighted, we are downgrading our call on IGB REIT from Outperform to Neutral. IGB REIT's share performance has been subdued as it only reached a high of RM1.45 in Mar 2013 from RM1.30 at the beginning of the year. YTD, IGB REIT's share price has underperformed the KLCI. We believe the weak share price performance is partly due to the lack of exciting acquisition news flow, therefore resulting in the absence of stock catalysts, while, at the same time, broader market conditions have improved post the 13th general elections, leading to less interest in stable dividend stocks like REITs. For exposure to Malaysian property, we suggest property developer stocks such as Mah Sing, which offers annual earnings growth of 20-23% p.a..

Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 25/10/13

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