Small Cap Asean Research
Malaysia Results Review
Property | REITS
24 July 2025
AME REIT (AMEREIT MK)
More Headroom For Growth; U/G BUY
U/G to BUY from Neutral, new MYR1.80 TP (from MYR1.75), 13% upside, c.6% FY27F (Mar) yield. AME REIT’s 1QFY26 results met expectations, supported by contributions from its recent acquisition. We turned more bullish on its valuation given wider yield spread post-rate cut and rising investor interest in domestic-centric names. We like the REIT for its high debt headroom, substantial floating-rate debt (81%) exposure to benefit from lower rates, and sturdy Sponsor-backed pipeline to tap Johor’s growing industrial market. This report marks the transfer of coverage to Tai Yu Jie.
Within expectations. 1QFY26 core profit of MYR9.2m (+3.2% YoY) met 21% of our full-year estimates. We deem the results to be within expectations in view of stronger quarters ahead, supported by a high number of planned acquisitions for FY26F. 1QFY26 DPU amounted to 1.96 sen (1QFY25: 1.84 sen). Meanwhile, 1QFY26 gearing stood at 23% (1QFY25: 15%).
Results review. YoY, 1QFY26 revenue rose 14.7% to MYR14.1m, supported by additional contributions from two properties (i-Park SAC 23 & 24 and i-TechValley 46) acquired in 4QFY25, as well as higher rental rates from tenancy renewals. Despite a 3.2% YoY increase in 1QFY26 core profit, net margin declined by 7.2ppts to 64.9%, mainly due to a rise in interest expense (+62.5% YoY) following the acquisitions, while the 2.5ppts drop in NPI margin to 90.2% was likely attributable to higher operating costs. QoQ, 1QFY26 revenue grew 8.2% on the back of these same factors, leading to a 7% QoQ increase in core profit to MYR9.2m.
Outlook. We expect QoQ earnings to improve, supported by the ongoing acquisition of properties slated for completion in 2QFY26. Beyond the immediate term, FY26F earnings should be further lifted by the full-year contribution from the recent acquisition spree, which includes five properties estimated to generate an additional MYR4.5m in FY26 gross rental income, complemented by the renewal of nine existing tenancies (27% gross rental). We see room for continued inorganic growth, supported by a low gearing level of 23%, providing financing headroom of MYR220m on top of the recent rate cut. Meanwhile, we view the downside risks from the sales & service tax (SST) expansion as relatively limited for AME REIT, given its long-term master leases and a tenant profile that largely consists of established MNCs) capable of absorbing higher tax-related costs.
Forecast and ratings. Post-results, we maintain our forecasts. However, we raise our TP to MYR1.80 (including a 2% ESG premium) after updating our CoE assumption (from 7% to 6.8%) to reflect a renewed beta assumption and lower risk-free rate following the recent rate cut. Our DDM-derived TP also implies an FY27F yield of 5%, offering a spread of 160bps over the 10-year Malaysian Government Bond yield.
Risks: Cancellation of acquisitions, slowdown in economic growth, and lower-than-expected rental reversions.
Chart data visualization would be displayed here.
Forecasts and Valuation
| Mar-24 | Mar-25 | Mar-26F | Mar-27F | Mar-28F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 48.0 | 50.9 | 61.2 | 69.2 | 71.6 |
| Net property income (MYRm) | 44.4 | 46.4 | 56.9 | 63.7 | 65.9 |
| Reported net profit (MYRm) | 33.8 | 34.4 | 41.4 | 44.0 | 45.8 |
| Total distributable income (MYRm) | 38.2 | 39.1 | 44.9 | 47.7 | 49.7 |
| DPS (MYR) | 0.07 | 0.07 | 0.08 | 0.09 | 0.09 |
| DPS growth (%) | 93.5 | 1.1 | 14.2 | 6.1 | 4.0 |
| P/B (x) | 1.45 | 1.43 | 1.44 | 1.45 | 1.46 |
| Dividend Yield (%) | 4.6 | 4.6 | 5.3 | 5.6 | 5.9 |
| Return on average equity (%) | 5.9 | 5.9 | 7.0 | 7.5 | 7.9 |
| Return on average assets (%) | 4.9 | 4.5 | 4.7 | 4.6 | 4.8 |
Source: Company data, RHB
Emissions And ESG
Trend analysis: No trend as AME REIT was only listed in Sep 2022.
| Mar-23 | Mar-24 | Mar-25 | Mar-26 | |
|---|---|---|---|---|
| Scope 1 | – | – | – | – |
| Scope 2 | – | – | – | – |
| Scope 3 | – | – | – | – |
| Total emissions | na | na | na | na |
Source: Company data, RHB
Latest ESG-Related Developments
All of AME REIT’s properties as of its listing are designed with sustainability in mind, incorporating green building criteria.
13 of its properties have obtained Green Building Index certifications in FY24, and the REIT continues to purchase buildings designed with green features.
ESG Unbundled
Overall ESG Score: 3.1 (out of 4)
Last Updated: 23 July 2025
Please refer to the ESG analysis on the next page. Small cap stocks are defined as companies with a market capitalisation of less than USD0.5bn.
E Score: 3.3 (EXCELLENT)
There is a focus on improving efficiency of resource utilisation – energy, water, and materials – through better infrastructure, construction, operations and maintenance.
S Score: 2.7 (GOOD)
AME REIT’s sponsor has made donations and sponsorship to various parties over the years, including the poor families, Pusat Kebajikan Care Haven, Persatuan Penjagaan Kanak-Kanak Terencat Akal Johor Bahru.
G Score: 3.0 (GOOD)
There is only one female out of a total six board members (17%) in AME REIT, which is below the Securities Commission’s target of 30%. Meanwhile, the number of independent directors make up half of the board. The REIT manager has a balanced split between female and male staff (50:50).
ESG Rating History
Chart data points: 3.1 (Jul-23), 3.1 (Sep-23), 3.1 (Nov-23), 3.1 (Jan-24), 3.1 (Mar-24), 3.1 (May-24), 3.1 (Jul-24), 3.1 (Sep-24), 3.1 (Nov-24), 3.1 (Jan-25), 3.1 (Mar-25), 3.1 (May-25), 3.1 (Jul-25)
Financial Exhibits
Company Profile
AME REIT is a shariah-compliant, pure industrial REIT based in Johor. The only M-REIT to own worker dormitories in its portfolio.
Key drivers
Inorganic growth from acquisition opportunities backed by a reputable sponsor and high debt headroom.
Key risks
- Cancellation of/new acquisitions;
- Slowdown/improvement in economic growth;
- Lower-/higher-than-expected rental reversions.
| Mar-24 | Mar-25 | Mar-26F | Mar-27F | Mar-28F | |
|---|---|---|---|---|---|
| Recurring EPS (MYR) | 0.06 | 0.07 | 0.08 | 0.08 | 0.09 |
| EPS (MYR) | 0.06 | 0.07 | 0.08 | 0.08 | 0.09 |
| DPS (MYR) | 0.07 | 0.07 | 0.08 | 0.09 | 0.09 |
| BVPS (MYR) | 1.10 | 1.12 | 1.11 | 1.10 | 1.09 |
| Return on average equity (%) | 5.9 | 5.9 | 7.0 | 7.5 | 7.9 |
| Weighted avg adjusted shares (m) | 521.57 | 524.72 | 526.97 | 528.03 | 529.08 |
| Mar-24 | Mar-25 | Mar-26F | Mar-27F | Mar-28F | |
|---|---|---|---|---|---|
| Total turnover | 48.0 | 50.9 | 61.2 | 69.2 | 71.6 |
| EBITDA | 39.4 | 40.9 | 52.0 | 58.5 | 60.5 |
| Operating profit | 39.4 | 40.9 | 52.0 | 58.5 | 60.5 |
| Net interest | (3.9) | (5.2) | (10.7) | (14.6) | (14.6) |
| Pre-tax profit | 35.5 | 35.8 | 41.4 | 44.0 | 45.8 |
| Taxation | (1.7) | (1.4) | 0.0 | 0.0 | 0.0 |
| Recurring net profit | 33.8 | 34.4 | 41.4 | 44.0 | 45.8 |
Results At a Glance
| FYE Mar (MYRm) | 1QFY25 | 4QFY25 | 1QFY26 | QoQ (%) | YoY (%) | Comments |
|---|---|---|---|---|---|---|
| Revenue | 12.3 | 13.1 | 14.1 | 8.2 | 14.7 | Earnings increased YoY and QoQ from the acquisition of two new properties |
| Net property income (NPI) | 11.4 | 11.6 | 12.7 | 9.9 | 11.5 | |
| Financing expense | (1.3) | (1.6) | (2.2) | 33.6 | 62.5 | Higher interest expense following the completed acquisitions |
| Profit income | 0.2 | 0.1 | 0.1 | 17.4 | (36.1) | |
| EI | 0.0 | 13.6 | 0.0 | nm | nm | |
| Other expenses | (0.2) | (0.3) | (0.2) | (28.1) | (2.3) | |
| Pretax profit | 8.9 | 22.2 | 9.2 | (58.4) | 3.6 | |
| Tax | 0.0 | (1.4) | 0.0 | nm | nm | |
| Net profit | 8.9 | 20.8 | 9.2 | (55.7) | 3.6 | |
| Core profit | 8.9 | 8.6 | 9.2 | 7.0 | 3.2 | In line with expectations |
| Core earnings per unit (sen) | 1.62 | 1.60 | 1.71 | 6.9 | 5.6 | |
| Dividends per unit (sen) | 1.84 | 1.83 | 1.96 | 7.1 | 6.5 | |
| NPI margin (%) | 92.7 | 88.7 | 90.2 | |||
| Pretax margin (%) | 72.1 | 169.6 | 65.2 | |||
| Net margin (%) | 72.1 | 65.6 | 64.9 |
Source: Company data, RHB
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
Investment Research Disclaimers
This report is issued and distributed in Malaysia by RHB Investment Bank Berhad (“RHBIB”). The views and opinions in this report are our own as of the date hereof and is subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. RHBIB has no obligation to update its opinion or the information in this report.
RESTRICTIONS ON DISTRIBUTION
Malaysia
This report is issued and distributed in Malaysia by RHB Investment Bank Berhad (“RHBIB”). The views and opinions in this report are our own as of the date hereof and is subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. RHBIB has no obligation to update its opinion or the information in this report.
Indonesia
This report is issued and distributed in Indonesia by PT RHB Sekuritas Indonesia. This research does not constitute an offering document and it should not be construed as an offer of securities in Indonesia. Any securities offered or sold, directly or indirectly, in Indonesia or to any Indonesian citizen or corporation (wherever located) or to any Indonesian resident in a manner which constitutes a public offering under Indonesian laws and regulations must comply with the prevailing Indonesian laws and regulations.
Singapore
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Analyst Certification
The analyst(s) who prepared this report, and their associates hereby, certify that: (1) they do not have any financial interest in the securities or other capital market products of the subject companies mentioned in this report, except for; and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
