AXREIT: REIT Performance Meets Expectations on Strong Property Income, Neutral Call Maintained
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading real estate investment trust (REIT) announced its third-quarter financial results for the fiscal year 2025 (3QFY25), with realised net profit coming in at RM52.3 million. This figure represents a significant year-on-year increase of 27.2% and a sequential quarter-on-quarter rise of 1.4%, aligning perfectly with both the investment bank’s and consensus expectations. For the nine-month period (9MFY25), the realised net profit reached RM154.2 million, marking a robust 28.1% year-on-year growth and accounting for approximately 76% of full-year estimates.
Performance Review
The impressive performance was largely attributed to a 17.3% year-on-year improvement in property income. This growth was driven by several key factors, including gains from the disposal of an investment property, The Annex, which was completed in April 2025 and contributed a net gain of RM8.8 million. Additionally, strong rental contributions from new assets, such as the fully occupied Axis Mega Distribution Centre (Phase 2) which achieved 100% occupancy in January 2025, and positive rental reversion from existing assets within the portfolio, bolstered the income. Overall, the Net Property Income (NPI) for 9MFY25 surged by 18.8% year-on-year to RM235.0 million, supported by these same dynamics. However, property expenses also saw an 8.0% year-on-year increase, reaching RM36.5 million, primarily due to the expansion of the property portfolio.
Strategic Acquisitions and Future Outlook
The REIT continued its strategic expansion initiatives in 3QFY25 by signing two sale and purchase agreements for a warehouse facility in Telok Gong, Port Klang (valued at RM80 million), and an industrial property in Kawasan Industri Bandar Sultan Suleiman, Port Klang (valued at RM50 million). These acquisitions are poised to further enhance the trust’s asset base. Looking ahead, the group is actively pursuing further acquisitions, targeting assets worth RM300 million in the remainder of FY25. The focus remains on acquiring Grade A logistics and manufacturing facilities with long leases and strong covenants, well-located logistics warehousing, and office, business parks, and industrial properties that offer potential for future enhancement. The group’s assets under management (AUM) expanded to RM5.26 billion in FY24, following a record eight acquisitions during the year, bringing its total portfolio to 68 properties.
Analyst View
PublicInvest Research maintained its “Neutral” recommendation on the REIT, with the target price remaining unchanged at RM1.96. The valuation is based on an expected dividend yield of approximately 5%.
