2QFY25 Results Review: Steady Earnings Growth
RETURN STATISTICS
| Price @ 29 July 2025 (RM) | 2.74 |
| Expected share price return (%) | -1.5 |
| Expected dividend yield (%) | +3.7 |
| Expected total return (%) | +2.2 |
Price performance (%)
| Absolute | Relative | |
|---|---|---|
| 1 month | 10.5 | 10.8 |
| 3 months | 7.9 | 17.0 |
| 12 months | 41.2 | 50.6 |
INVESTMENT STATISTICS
| FYE Dec | 2025E | 2026F | 2027F |
|---|---|---|---|
| Revenue | 654 | 944 | 971 |
| Operating Profit | 494 | 695 | 718 |
| PBT | 505 | 708 | 734 |
| Core Net Income | 402 | 553 | 574 |
| Core EPU (sen) | 11.11 | 12.80 | 13.29 |
| Net DPU (sen) | 10.14 | 11.56 | 12.00 |
| Dividend Yield | 3.7% | 4.2% | 4.3% |
KEY STATISTICS
| FBM KLCI | 1,523.82 |
| Issue shares (m) | 3,615.39 |
| Estimated free float (%) | 44.18 |
| Market Capitalisation (RM’m) | 9,923.12 |
| 52-wk price range | RM1.87 – RM2.79 |
| 3-mth average daily volume (m) | 3.75 |
| 3-mth average daily value (RM’m) | 9.24 |
| Top Shareholders (%) | |
| IGB Berhad | 47.87 |
| EPF | 10.20 |
| KWAP | 6.59 |
| IGB REIT Management Sdn Bhd | 6.12 |
1HFY25 results within expectations.
IGB REIT 1HFY25 net income of RM208.4m came in within expectations, making up 54% and 51% of our and consensus full year estimates respectively. IGB REIT announced distribution per unit (DPU) of 2.82sen for 2QFY25, bringing total DPU to 6.01sen in 1HFY25.
Steady earnings growth.
On a sequential basis, 2QFY25 core earnings declined to RM97.8m as earnings normalised from the high base in 1QFY25 while 2Q is seasonally quieter quarter. Recall that earnings in 1QFY25 were lifted by higher shopper footfall amid festive seasons. On yearly basis, 2QFY25 earnings were higher (+11% yoy), bringing 1HFY25 core earnings to RM208.4m (+9.4%yoy). 1HFY25 earnings remains solid as tenant sales and shopper footfall at Mid Valley Megamall and The Gardens Mall remain resilient. Besides, the earnings growth was supported by positive rental reversion.
Healthy earnings prospect.
We see stable earnings outlook for IGB REIT as performance of Mid Valley Megamall and The Gardens Mall will sustain by the high occupancy rate and high shopper footfall. Earnings prospect is expected to be better from FY26 onwards due to contribution from Mid Valley Southkey Mall. Recall that IGB REIT recently proposed to acquire Mid Valley Southkey Mall in Johor Bahru for RM2.65b. The acquisition is expected to complete in 4QFY25. The acquisition is expected to be yield accretive due to attractive net property income (NPI) yield of 7.2%
Downgrade to NEUTRAL with a revised TP of RM2.70.
We fine tune our FY25 earnings forecast by +3.9% as we earnings to pick up in 2HFY25 due to year-end shopping spree. We also revise our FY26/27 earnings forecast by +3.6%/+4.8%. We revise our TP for IGB REIT to RM2.70 from RM2.48 as we rollover our valuation. We downgrade IGB REIT to NEUTRAL from BUY as we believe that all the positives have been priced in. While we see that the acquisition of Mid Valley Southkey Mall is an earnings catalyst, we think that positives are largely priced in. Besides, distribution yield for FY26 tapers to 4.2% following recent share price rally which we deem unattractive at current juncture.
IGB REIT: 2QFY25 RESULTS SUMMARY
| FYE Dec (RM’m, unless otherwise stated) | 2QFY25 | %YoY | %QoQ | FY25 | %YoY |
|---|---|---|---|---|---|
| Gross Revenue | 160.1 | 6.8% | -6.6% | 331.5 | 6.1% |
| Net Property Income (NRI) | 119.9 | 9.5% | -10.0% | 253.0 | 8.2% |
| Net Investment Income | 116.7 | 11.1% | -11.1% | 247.8 | 8.3% |
| Net Income | 92.5 | 13.4% | -13.2% | 199.1 | 9.9% |
| Core Net Income (CNI) | 97.8 | 11.0% | -11.6% | 208.4 | 9.4% |
| Realised EPU (sen) | 2.6 | 13.1% | -13.3% | 5.5 | 9.5% |
| Core EPU (sen) | 2.7 | 10.6% | -11.6% | 5.8 | 9.0% |
| Gross DPU (sen) | 2.8 | 10.2% | -11.6% | 6.0 | 8.9% |
Source: Company, MBSB Research
FINANCIAL SUMMARY
| Profit or Loss (RM’m) | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 604 | 626 | 654 | 944 | 971 |
| Operating Profit | 448 | 456 | 494 | 695 | 718 |
| PBT | 612 | 676 | 505 | 708 | 734 |
| Net Income | 518 | 580 | 402 | 554 | 576 |
| Core Net Income | 359 | 369 | 402 | 553 | 574 |
| Core EPU (sen) | 10.0 | 10.2 | 11.1 | 12.8 | 13.3 |
| Core PER (x) | 27.5 | 26.9 | 24.7 | 21.4 | 20.6 |
| NAV/unit (RM) | 1.12 | 1.18 | 1.17 | 1.37 | 1.38 |
| P/NAV (x) | 2.44 | 2.33 | 2.33 | 2.00 | 1.98 |
| Cash Flow (RM’m) | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| Cash flows from operating activities | |||||
| Net income before taxation | 518 | 580 | 402 | 553 | 574 |
| Net cash from operating activities | 433 | 460 | 526 | 672 | 769 |
| Cash flows from investing activities | |||||
| Interest received | 5 | 9 | 7 | 8 | 9 |
| Net cash used in investing activities | -27 | -30 | -1026 | -4 | -3 |
| Cash flows from financing activities | |||||
| Net cash from/(used in) financing activities | -422 | -448 | 634 | -660 | -741 |
| Net increase/(decrease) in cash and cash equivalents | -15 | -17 | 135 | 9 | 25 |
| Cash and cash equivalent at 1 January | 258 | 243 | 226 | 361 | 370 |
| Cash and cash equivalent at 1 December | 243 | 226 | 361 | 370 | 395 |
| Balance Sheet (RM’m) | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| Investment Properties | 5,186 | 5,436 | 5,463 | 8,141 | 8,181 |
| Total non-current assets | 5,188 | 5,438 | 5,464 | 8,142 | 8,182 |
| Cash | 274 | 258 | 361 | 370 | 395 |
| Other Assets | 43 | 45 | 25 | 133 | 250 |
| Total Assets | 5,505 | 5,741 | 5,850 | 8,644 | 8,827 |
| LT Borrowings | 1,199 | 1,200 | 1,224 | 2,315 | 2,430 |
| ST Borrowings | 15 | 15 | 39 | 56 | 57 |
| Other Liability | 55 | 63 | 63 | 63 | 63 |
| Total Liability | 1,468 | 1,486 | 1,605 | 2,722 | 2,848 |
| Unitholders’ capital | 4,550 | 4,576 | 4,618 | 6,240 | 6,240 |
| Other Equity | (514) | (321) | (373) | (318) | (261) |
| Total Equity | 4,037 | 4,255 | 4,245 | 5,922 | 5,979 |
| Equity + Liability | 5,505 | 5,741 | 5,850 | 8,644 | 8,827 |
| Profitability Ratios (%) | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| PBT margin | 101.3% | 107.9% | 77.2% | 75.1% | 75.5% |
| Core net income margin | 59.4% | 58.9% | 61.4% | 58.6% | 59.1% |
| ROE | 9.1% | 8.9% | 9.4% | 10.9% | 9.7% |
| ROA | 6.6% | 6.6% | 6.9% | 7.6% | 6.6% |
MBSB RESEARCH (formerly known as MIDF RESEARCH) is part of MBSB Investment Bank Berhad (formerly known as MIDF Amanah Investment Bank Berhad)
(Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad)
DISCLOSURES AND DISCLAIMER
This report has been prepared by MBSB Investment Bank Berhad (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD) 197501002077 (24878-X).
It is for distribution only under such circumstances as may be permitted by applicable law. Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MBSB INVESTMENT BANK BERHAD (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD) makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such. This report is not, and should not be construed as, an offer to buy or sell any securities or other financial instruments. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts will initiate, update and cease coverage solely at the discretion of MBSB INVESTMENT BANK BERHAD (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD). The directors, employees and representatives of MBSB INVESTMENT BANK BERHAD (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD) may have an interest in any of the securities mentioned and may benefit from the information herein. Members of the MBSB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein This document may not be reproduced, distributed or published in any form or for any purpose.
MBSB INVESTMENT BANK (formerly known MIDF INVESTMENT BANK): GUIDE TO RECOMMENDATIONS
STOCK RECOMMENDATIONS
- BUY: Total return is expected to be >10% over the next 12 months.
- TRADING BUY: The stock price is expected to rise by >10% within 3 months after a Trading Buy rating has been assigned due to positive news flow.
- NEUTRAL: Total return is expected to be between -10% and +10% over the next 12 months.
- SELL: Total return is expected to be < -10% over the next 12 months.
- TRADING SELL: The stock price is expected to fall by >10% within 3 months after a Trading Sell rating has been assigned due to negative news flow.
SECTOR RECOMMENDATIONS
- POSITIVE: The sector is expected to outperform the overall market over the next 12 months.
- NEUTRAL: The sector is to perform in line with the overall market over the next 12 months.
- NEGATIVE: The sector is expected to underperform the overall market over the next 12 months.
ESG RECOMMENDATIONS* – source Bursa Malaysia and FTSE Russell
- ☆☆☆☆: Top 25% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
- ☆☆☆: Top 26-50% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
- ☆☆: Top 51%- 75% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
- ☆: Bottom 25% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
* ESG Ratings of PLCs in FBM EMAS that have been assessed by FTSE Russell in accordance with FTSE Russell ESG Ratings Methodology
