IGBREIT: REIT Delivers Strong Full-Year Performance, Analysts Issue Buy Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading Real Estate Investment Trust (REIT) has reported impressive financial results for the fourth quarter and full fiscal year 2025, significantly exceeding expectations. The robust performance was largely driven by substantial rental income growth from its established mall portfolio and a significant contribution from its newly operational asset.
Performance Review
For the fourth quarter of fiscal year 2025 (4QFY25), the REIT saw its revenue climb by 31.6% year-on-year (YoY) to RM208.3 million, while Net Property Income (NPI) surged by 44.3% YoY to RM155.7 million. This strong upward trend extended to the full fiscal year, with total revenue for FY25 reaching RM705.1 million, a 12.6% YoY increase, and NPI growing by 17.1% YoY to RM533.6 million.
The realised net profit for FY25 stood at RM435.5 million, marking an 18.1% YoY increase. This figure comfortably surpassed both internal and consensus estimates, reaching approximately 104% of full-year projections. The strong profit after taxation was further bolstered by net fair value changes related to investment properties during the quarter.
The impressive growth in revenue and NPI was primarily attributed to higher rental income generated by its flagship properties, Mid Valley Megamall and The Gardens Mall. A crucial factor was also the additional income stream from the Mid Valley Southkey Mall, which completed its operations in November 2025 and quickly began contributing to the portfolio’s earnings. The manager approved a distribution of 97.5% of the REIT’s quarterly distributable income, amounting to RM128.4 million or 2.97 sen per unit.
Operational Strength and Future Outlook
Operational metrics underscore the REIT’s strong market position, with occupancy rates across Mid Valley Megamall, The Gardens Mall, and the new Mid Valley Southkey Mall virtually full, averaging around 99%. Average gross monthly rental incomes have also shown positive trends across the portfolio, indicating healthy demand for prime retail spaces.
Looking ahead to FY26, the REIT faces an active lease renewal cycle. Mid Valley Megamall has 171 leases due for renewal, representing about 40.5% of its net lettable area (NLA). The Gardens Mall will see 99 leases up for renewal, accounting for approximately 26.0% of its NLA, while Mid Valley Southkey Mall has 81 leases, or about 19.1% of NLA, scheduled for renewal. This presents opportunities for positive rental reversions and continued optimization of the asset base.
In light of the robust financial performance, strong operational fundamentals, and positive future outlook, analysts have issued a BUY recommendation for the REIT, setting a target price of RM0.25, representing a potential upside of 25.0% from the last traded price of RM0.20.
