Sunday, January 26, 2014

KLCC Property - Earnings on track (MKE)

KLCC Property
Share Price: MYR5.57
Target Price: MYR6.25
Earnings on track

FY13 core pretaxprofit of MYR875.2m (+9% YoY) was within our expectations.
Unit price declined by 4.8%YTD but westillthink it is not the right time tobebold as the re-pricing of M-REITs could continue, especially in1H14amid volatile bond yields.
We finetuneour FY14-15 earnings forecastsby +5%.OurDCF-based TPis largely unchanged at MYR6.25 (-0.1sen). Netyield is6%for FY14, vsindustry averageof6.9%. HOLD.

What’s New
KLCCP’s 4Q13 core pretax profit of MYR224m (+0.1% QoQ) took 2013 core pretax earnings to MYR875.2m (+9% YoY), making up 101% of our earnings forecasts.
YoY growth was driven by most divisions except for its hotel business, Mandarin Oriental, on lower F&B and occupancy rates respectively. The trust declared 4Q13 NDPU of 8.2sen (YTD: 27.7sen), in line with our expectations.

What’s Our View
We project decent FY14 pretax profit growth of 7% YoY, mainly supported by existing assets. Currently, 80% of KLCCP’s total debt comprises fixed-rate loans. In the event of a 25bps hike in interest rates, we estimate a minimal downgrade of 0.2% in our FY14 net profit forecast for KLCCP.

This year will see higher fuel bills, electricity tariffs and potential assessment fee hikes, while 2015 will see the implementation of the GST and potentially a hike in the OPR. Fortunately, the majority of KLCCP’s leases are based on a triple net lease (except for Mandarin Oriental, Suria KLCC and Kompleks Dayabumi), which requires the tenants to meet all outgoings, including property assessment and electricity charges, thus minimising the impact to KLCCP’s bottom line.

We fine tune our FY14/15 earnings forecasts by +5%. We also take the opportunity to introduce our FY16 earnings forecasts.

Source/Extract/Excerpts/来源/转贴/摘录: MKE-Research,
Publish date: 22/01/14

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