AMEREIT: Industrial REIT Delivers Strong First-Half Performance, Outlook Remains Positive
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
An industrial Real Estate Investment Trust (REIT) announced robust financial results for the first half of fiscal year 2026 (1HFY26), with core profit reaching MYR19 million, marking a 7.7% year-on-year increase. This performance was in line with market expectations, constituting 47% of full-year estimates. The REIT also reported a 10.2% quarter-on-quarter rise in its 2QFY26 distribution per unit (DPU) to 2.16 sen, contributing to a 1HFY26 DPU of 4.12 sen, an 11.1% increase year-on-year. Revenue for 1HFY26 climbed 18.7% year-on-year to MYR30 million.
The strong showing was primarily attributed to the full half-year contribution from Plot 16 Indahpura and incremental income from the recently acquired i-Tech Valley assets (34, 35, and 36). The consistent positive rental reversions from existing assets further bolstered revenue.
Operational Highlights and Challenges
Despite the positive revenue growth, core profit margins experienced a dip to 65% in 1HFY26, down from 72% in 1H25. This was largely due to a significant 76% year-on-year increase in financing costs, a direct consequence of recent asset acquisitions. However, the Net Property Income (NPI) margin remained stable at 91%, showing resilience in operational efficiency (compared to 92% in 1H25). Occupancy rates also demonstrated stability at 98%, recovering effectively from a temporary dip in September 2025 caused by a tenant transition.
Future Outlook and Recommendation
Management anticipates a quarter-on-quarter improvement in earnings for 2HFY26, driven by the maiden rental contribution from i-Tech Valley 36, which commenced in October 2025. The REIT is poised to benefit from its 100% floating-rate debt profile in a declining interest rate environment, coupled with the growing status of Johor as a key industrial hub.
The investment bank highlights the REIT’s strong inorganic growth prospects, stable occupancy of 98%, and a portfolio of quality industrial tenants and long leases as key positives. The REIT maintains a healthy debt headroom of approximately MYR200 million, providing ample war chest for future acquisition opportunities.
Given these factors, the investment bank reiterates its “Buy” recommendation, with a revised target price reflecting confidence in the REIT’s continued growth trajectory and robust operational fundamentals.
