RESEARCH
Axis REIT: 2QFY25 Results Review Resilient Earnings
| RETURN STATISTICS | |
|---|---|
| Price @ 30 July 2025 (RM) | 1.97 |
| Expected share price return (%) | +4.6 |
| Expected dividend yield (%) | +4.6 |
| Expected total return (%) | +9.2 |
1HFY25 earnings slightly above our expectation. Axis REIT 1HFY25 core net income of RM101m came in within consensus expectation but slightly above ours, making up 49% and 56% of consensus and our full year forecast respectively. The positive variance was due to the higher-than-expected rental income growth. Axis REIT announced distribution per unit (DPU) of 2.65sen for 2QFY25, bringing total DPU to 5.15sen in 1HFY25.
Earnings growth underpinned by newly acquired assets. On a sequential basis, 2QFY25 core net income was flattish at RM50.5m (-0.2%qoq) as rental income was stable. On yearly basis, 2QFY25 net income increased to RM50.5m (+29.5%yoy), bringing 1HFY25 net income higher at RM101m (+26.5%yoy). The net income growth was underpinned by higher rental income following acquisition of 5 properties. The earnings growth was also underpinned by positive rental reversion as performance of industrial properties remain solid. Nevertheless, earnings per unit grew at a milder quantum of +9%yoy due to dilutive impact from unit placement in 4QFY24.
Expanding portfolio via asset acquisitions. Axis REIT is targeting to grow its portfolio via asset acquisition with estimated value of acquisition targets at RM430m. Axis REIT is looking to execute the acquisitions in 2HFY25. Potential acquisition targets are mainly Grade A logistic facilities and logistics warehousing that located at good location. The expansion in industrial property portfolio underpins long term growth of Axis REIT due to stable outlook for industrial properties in Malaysia.
Maintain NEUTRAL with a revised TP of RM2.06. We revise our FY25F/26F/27F earnings forecast by +11.8%/+12.5%/+15% to factor in the higher rental growth. Corresponding to the revision in earnings and DPU, our TP for Axis REIT is revised to RM2.06 from RM2.02. Our TP is based on dividend discount model. While we see outlook for Axis REIT to remain stable due to the defensive earnings from its industrial properties, yield tapers to 4.6% following increase in share price recently. Hence, we maintain our NEUTRAL call on Axis REIT.
SHARE PRICE CHART
| Price performance (%) | Absolute | Relative |
|---|---|---|
| 1 month | 1.0 | 1.6 |
| 3 months | 1.0 | 4.2 |
| 12 months | 8.2 | 15.4 |
| INVESTMENT STATISTICS | 2025E | 2026F | 2027F |
|---|---|---|---|
| Revenue | 360 | 373 | 384 |
| Operating Profit | 319 | 331 | 342 |
| PBT | 320 | 332 | 343 |
| Core Net Income | 203 | 211 | 224 |
| Core EPU (sen) | 10.02 | 10.43 | 11.16 |
| Net DPU (sen) | 9.05 | 9.32 | 9.87 |
| Dividend Yield | 4.6% | 4.7% | 5.0% |
| KEY STATISTICS | |
|---|---|
| FBM KLCI | 1,524.50 |
| Issue shares (m) | 2010.49 |
| Estimated free float (%) | 80.78 |
| Market Capitalisation (RM’m) | 3,980.93 |
| 52-wk price range | RM1.71-RM2.05 |
| 3-mth average daily volume (m) | 1.68 |
| 3-mth average daily value (RM’m) | 3.27 |
| Top Shareholders (%) | |
| EPF | 19.37 |
| KWAP | 8.66 |
| Lembaga Tabung Haji | 5.76 |
| Prudential Plc | 5.00 |
Analyst
Jessica Low Jze Tieng
jessica.low@midf.com.my
03-2173 8391
Axis REIT: 2QFY25 RESULTS SUMMARY
| FYE Dec (RM’m, unless otherwise stated) | 2QFY25 | %YoY | %QoQ | FY25 | %YoY |
|---|---|---|---|---|---|
| Gross Revenue | 90.3 | 17.9% | 0.4% | 180.1 | 18.45% |
| Net Investment Income | 75.1 | 16.1% | -2.1% | 151.8 | 15.55% |
| Net Income | 47.0 | 20.5% | -4.4% | 96.1 | 18.29% |
| Core Net Income (CNI) | 50.5 | 29.5% | -0.2% | 101.0 | 26.45% |
| Realised EPU (sen) | 2.3 | 4.2% | -4.4% | 4.8 | 2.30% |
| Core EPU (sen) | 2.5 | 12.0% | -0.2% | 5.0 | 9.35% |
| Gross DPU (sen) | 2.65 | 17.8% | 6.0% | 5.15 | 13.19% |
Source: Company, MBSB Research
FINANCIAL SUMMARY
Profit or Loss (RM’m)
| FYE Dec | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 286 | 320 | 360 | 373 | 384 |
| Operating Profit | 319 | 322 | 319 | 331 | 342 |
| PBT | 319 | 322 | 320 | 332 | 343 |
| Net Income | 227 | 217 | 200 | 209 | 222 |
| Core Net Income | 144 | 163 | 203 | 211 | 224 |
| Core EPU (sen) | 8.2 | 8.1 | 10.0 | 10.4 | 11.2 |
| Core PER (x) | 24.0 | 24.3 | 19.7 | 18.9 | 17.6 |
| NAV/unit (RM) | 1.62 | 1.64 | 1.64 | 1.64 | 1.65 |
| P/NAV (x) | 1.22 | 1.20 | 1.20 | 1.20 | 1.19 |
Balance Sheet (RM’m)
| FYE Dec | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| Investment properties | 4,186 | 4,444 | 5,092 | 5,122 | 5,153 |
| Total non-current assets | 4,188 | 4,446 | 5,092 | 5,128 | 5,160 |
| Cash and cash equivalents | 22 | 8 | 14 | 23 | 27 |
| Other assets | 313 | 805 | 155 | 182 | 224 |
| Total Assets | 4,523 | 5,259 | 5,261 | 5,334 | 5,411 |
| LT Borrowings | 733 | 740 | 935 | 972 | 1,011 |
| ST Borrowings | 813 | 815 | 816 | 840 | 865 |
| Other Liabilities | 151 | 404 | 197 | 203 | 210 |
| Total Liability | 1,697 | 1,959 | 1,948 | 2,016 | 2,086 |
| Unitholders’ capital | 1,946 | 2,129 | 2,574 | 2,574 | 2,574 |
| Other Equity | 880 | 1,170 | 739 | 744 | 750 |
| Total Equity | 2,826 | 3,299 | 3,313 | 3,318 | 3,325 |
| Equity + Liability | 4,523 | 5,259 | 5,261 | 5,334 | 5,411 |
Cash Flow (RM’m)
| FYE Dec | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| Cash flows from operating activities | |||||
| Net income before taxation | 222 | 214 | 196 | 204 | 216 |
| Net cash from operating activities | 199 | 306 | 331 | 280 | 310 |
| Cash flows from investing activities | |||||
| Acquisition of investment properties | -4 | 2 | -46 | -45 | -44 |
| Net cash used in investing activities | -175 | -621 | -72 | -70 | -69 |
| Cash flows from financing activities | |||||
| Net cash from/(used in) financing activities | -15 | 384 | -177 | -180 | -200 |
| Net increase/(decrease) in cash and cash equivalents | 8 | 69 | 82 | 29 | 41 |
| Cash and cash equivalent at 1 January | 24 | 32 | 101 | 183 | 212 |
| Cash and cash equivalent at 1 December | 32 | 101 | 183 | 212 | 253 |
Profitability Ratios (%)
| FYE Dec | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| PBT margin | 111.6% | 100.7% | 88.9% | 89.2% | 89.4% |
| Core net income margin | 50.2% | 50.8% | 56.2% | 56.6% | 58.5% |
| ROE | 5.3% | 5.3% | 6.1% | 6.4% | 6.8% |
| ROA | 3.9% | 3.3% | 3.3% | 3.9% | 4.0% |
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
