PUBLIC INVESTMENT BANK
SUNWAY REIT: 2QFY25 Results In Line, Neutral Rating Maintained
DESCRIPTION
Sunway REIT owns diversified assets such as retail, office and hotels
- 12-Month Target PriceRM2.10
- Current PriceRM2.15
- Expected Return-2%
- Previous Target PriceRM2.10
- MarketMain
- SectorREIT
- Bursa Code2176
- Bloomberg TickerSREIT MK
- Shariah-CompliantNo
SHARE PRICE CHART
Chart data unavailable in this format. The 52-week range is RM1.59-2.32.
- 52 Week Range (RM)1.59-2.32
- 3-Month Average Vol (‘000)4,142.4
SHARE PRICE PERFORMANCE
| 1M | 3M | 12M | |
|---|---|---|---|
| Absolute Returns | 1.9 | 14.1 | 43.7 |
| Relative Returns | -0.2 | 12.5 | 37.7 |
KEY STOCK DATA (post-deal completion)
- Market Capitalisation (RMm)7,363.3
- No. of Shares (m)3,424.8
MAJOR SHAREHOLDERS (post-deal completion)
- Sunway Berhad40.9%
- EPF15.2%
- Kumpulan Wang Persaraan6.2%
Tan Siang Hing
T 603 2268 3000
F 603 2268 3014
E research@publicinvestbank.com.my
In Line
Sunway REIT’s (SREIT) 2QFY25 realised net profit was largely in line with our and consensus expectations at RM96.5m (+23.7% YoY, -2.1% QoQ). YTD, Group’s 1HFY25 realised net profit of RM195.1m (+21.9% YoY) constituted about 51% and 49% of our and consensus full year estimates. The Group’s net property income (NPI) rose 20% YoY in 2QFY25 to RM154.9m, driven by the full-quarter contribution from assets acquired in FY24. The Group expects the profit momentum to continue into 2HFY25, given the 25bps OPR cut and the completion of AEON Mall Seri Manjung asset acquisition. Again, Group performance is underpinned by its Retail segment and continued growth from the Industrial & Others segment. Meanwhile, the Hotel and Office segments experienced temporary softness due to seasonal factors and external disruptions. All told, no change to our earnings estimates and we maintain our TP of RM2.10, or pricing it at about 5.5% dividend yield, based on FY26 dividend forecast. Given the limited share price upside, we maintain our Neutral call.
- Retail segment rose 29% YoY in 2QFY25 to RM160m, driven by higher contributions from new retail assets acquired in FY24, alongside improved revenue from Sunway Pyramid Mall following the opening of its Oasis wing in November 2024 and the earlier-than-anticipated full reopening of Sunway Carnival Mall’s existing wing in May 2025. As such, the segment’s NPI increased by 32% YoY to RM114.1m. Management expects further revenue growth in coming quarters, mainly from AEON Mall Seri Manjung asset acquisition, which was completed in July 2025.
- Hotel segment dropped 13% YoY to RM16.7m in 2QFY25 primarily due to lower occupancy at Klang Valley hotels stemming from fewer one-off events and the temporary closure of several Middle Eastern airspaces in June 2025. As such, NPI for Hotel segment fell by 16% YoY to RM15.6m in 2QFY25. The segment’s performance was also weighed down by a soft first quarter, impacted by the Ramadan period and subdued demand for Meetings, Incentives, Conferences, and Exhibitions, compounded by the typical mid-year seasonal slowdown. However, management indicates that occupancy has started to recover, paving the way for a rebound in 2HFY25.
- Slight decline in Office segment, easing 2% YoY to RM20.4m in 2QFY25, while NPI dipped 6% YoY to RM12.2m, mainly due to a marginal decrease in occupancy. The Services segment recorded revenue and NPI of RM9.8m in 2QFY25 (+2.3% YoY), following the annual rental reversion in line with the master lease agreement for the Sunway university & college campus.
KEY FORECAST TABLE
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 715.7 | 767.1 | 821.2 | 852.2 | 870.5 | 5.0% |
| Pre-tax Profit | 339.6 | 527.7 | 382.5 | 406.3 | 418.0 | 5.3% |
| Reported Net Profit | 339.6 | 524.8 | 382.5 | 406.3 | 418.0 | 5.3% |
| Realised Net Profit | 319.0 | 343.8 | 382.5 | 406.3 | 418.0 | 7.0% |
| Realised EPS (Sen) | 9.3 | 10.0 | 11.2 | 11.9 | 12.2 | 7.0% |
| P/E (x) | 23.1 | 21.4 | 19.2 | 18.1 | 17.6 | |
| DPS (Sen) | 9.3 | 10.0 | 10.6 | 11.3 | 11.6 | |
| Dividend Yield (%) | 4.3 | 4.7 | 4.9 | 5.2 | 5.4 |
Source: Company, PublicInvest Research estimates
Results Review
Table 1: Results Review (FYE Dec, MYRm)
| FYE Dec (MYRm) | 2QFY25 | 2QFY24 | YoY chg (%) | 1QFY25 | QoQ chg (%) | YTD FY25 | YTD FY24 | YoY chg (%) |
|---|---|---|---|---|---|---|---|---|
| Gross rental income | 211.4 | 175.6 | 20.4 | 218.9 | (3.4) | 430.3 | 354.2 | 21.5 |
| Net property income | 154.9 | 129.3 | 19.8 | 157.2 | (1.5) | 312.1 | 259.8 | 20.1 |
| Interest income | 5.1 | 2.1 | 146.8 | 3.0 | 71.2 | 8.1 | 8.4 | (2.9) |
| Revaluation gain/others | 27.0 | 66.2 | 0.0 | 27.0 | 66.2 | |||
| Finance costs | (43.8) | (40.0) | 9.5 | (42.5) | 3.1 | (86.3) | (77.6) | 11.2 |
| Profit before tax | 129.4 | 145.1 | (10.8) | 104.3 | 24.0 | 233.7 | 232.0 | 0.7 |
| Taxation | 0.0 | 0.0 | (2.9) | 0.0 | 0.0 | |||
| Net profit | 129.4 | 145.1 | (10.8) | 104.3 | 24.0 | 233.7 | 232.1 | 0.7 |
| Realised Net Profit | 96.5 | 78.0 | 23.7 | 98.6 | (2.1) | 195.1 | 160.0 | 21.9 |
Source: Company
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 715.7 | 767.1 | 821.2 | 852.2 | 870.5 |
| Total Expenses | -45.9 | -47.4 | -49.8 | -51.3 | -52.1 |
| Pre-tax Profit | 339.6 | 527.7 | 382.5 | 406.3 | 418.0 |
| Income Tax | -1.4 | -2.9 | 0.0 | 0.0 | 0.0 |
| Effective Tax Rate (%) | 0.4 | 0.5 | 0.0 | 0.0 | 0.0 |
| Minorities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Reported Net Profit | 339.6 | 524.8 | 382.5 | 406.3 | 418.0 |
| Realised Net Profit | 319.0 | 343.8 | 382.5 | 406.3 | 418.0 |
| Growth | |||||
| Revenue | 16% | 7% | 7% | 4% | 2% |
| Pre-tax Profit | 2% | 55% | -28% | 6% | 3% |
| Reported Net Profit | 5% | 55% | -27% | 6% | 3% |
| Realised Net Profit | -3% | 8% | 11% | 6% | 3% |
BALANCE SHEET DATA
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Property, Plant & Equipment | 8,912.4 | 10,472.1 | 10,576.8 | 10,682.6 | 10,789.4 |
| Cash and Cash Equivalents | 425.3 | 289.8 | 263.6 | 319.5 | 375.9 |
| Receivables, deposits and prepayment | 88.8 | 40.8 | 40.8 | 40.8 | 40.8 |
| Other Assets | 112.2 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total Assets | 9,538.6 | 10,802.6 | 10,881.1 | 11,042.8 | 11,206.1 |
| Payables | 268.6 | 341.7 | 350.9 | 363.5 | 370.9 |
| Borrowings | 3,637.0 | 4,466.7 | 4,466.7 | 4,466.7 | 4,466.7 |
| Deferred tax | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other Liabilities | 117.0 | 122.1 | 122.1 | 122.1 | 121.1 |
| Total Liabilities | 4,022.5 | 4,930.6 | 4,939.8 | 4,952.4 | 4,959.8 |
| Shareholders’ Equity | 5,516.1 | 5,872.0 | 5,941.4 | 6,090.4 | 6,246.3 |
| Total Equity and Liabilities | 9,538.6 | 10,802.6 | 10,881.1 | 11,042.8 | 11,206.1 |
PER SHARE DATA & RATIOS
| FYE Dec | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Book Value Per Share | 1.6 | 1.7 | 1.7 | 1.8 | 1.8 |
| NTA Per Share | 1.6 | 1.7 | 1.7 | 1.8 | 1.8 |
| EPS (Sen) | 9.3 | 10.0 | 11.2 | 11.9 | 12.2 |
| DPS (Sen) | 9.3 | 10.0 | 10.6 | 11.3 | 11.6 |
| Payout Ratio (%) | 99.8 | 99.6 | 95.0 | 95.0 | 95.0 |
| ROA (%) | 3.6 | 4.9 | 3.5 | 3.7 | 3.7 |
| ROE (%) | 6.2 | 8.9 | 6.4 | 6.7 | 6.7 |
Source: Company (actual), PublicInvest Research estimates (forecast)
RATING CLASSIFICATION
STOCKS
- OUTPERFORM
- The stock return is expected to exceed a relevant benchmark’s total of 10% or higher over the next 12 months.
- NEUTRAL
- The stock return is expected to be within +/- 10% of a relevant benchmark’s return over the next 12 months.
- UNDERPERFORM
- The stock return is expected to be below a relevant benchmark’s return by -10% over the next 12 months.
- TRADING BUY
- The stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call.
- TRADING SELL
- The stock return is expected to be below a relevant benchmark’s return by -5% or more over the next 3 months.
- NOT RATED
- The stock is not within regular research coverage.
SECTOR
- OVERWEIGHT
- The sector is expected to outperform a relevant benchmark over the next 12 months.
- NEUTRAL
- The sector is expected to perform in line with a relevant benchmark over the next 12 months.
- UNDERWEIGHT
- The sector is expected to underperform a relevant benchmark over the next 12 months.
DISCLAIMER
This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents.
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