AXREIT: REIT’s Strong 9M25 Performance Driven by Acquisitions and Cost Efficiencies
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Axis REIT (AXRB MK) has reported robust financial results for the first nine months of 2025, with its core net profit exceeding market expectations. The strong performance was primarily attributed to successful acquisitions made in the previous financial year and enhanced operational efficiencies.
Performance Review
For the nine months ended September 2025 (9M25), the REIT achieved a core net profit of MYR154.2 million, marking a significant 28.1% year-on-year increase. This figure accounts for approximately 75% of the investment bank’s and 74% of consensus full-year estimates, indicating that results were well within expectations. The distribution per unit (DPU) for 3Q25 stood at 2.65 sen, bringing the 9M25 DPU to 7.8 sen, a 13% increase year-on-year.
Revenue for 9M25 climbed 18% year-on-year, largely due to contributions from acquisitions totaling MYR719 million in FY24. Operational efficiency gains were evident in a robust net property income (NPI) margin of 87.1% (up from 86.2% in 9M24) and a strong net margin of 56.5% (compared to 51.8% in 9M24).
Despite overall strong performance, the REIT’s occupancy rate remained stable at 97% quarter-on-quarter. The management has successfully secured renewals for 70.2% and re-tenanted another 12.2% of the 3.83 million sq ft of leases expiring in 2025, demonstrating strong tenant retention and demand.
Future Outlook and Strategy
The REIT anticipates stable earnings for 4Q25, with no new acquisitions expected to complete by the end of 2025. Future earnings growth is largely dependent on the leasing progress of two recently acquired and currently vacant assets in Selangor: Bukit Raja (expected completion 4Q26) and Bandar Sultan Suleiman, Port Klang (expected completion 1Q26). The full impact of these properties is projected to materialise from the second half of 2026.
On the funding front, Axis REIT manager has proactively secured RM300 million via a 10-year sukuk at an attractive 4% coupon rate. This strategic move adds low-cost, long-tenure debt to its balance sheet, leveraging an RM890 million funding headroom (based on a 50% cap), which positions the REIT favorably for future inorganic growth opportunities. A key downside risk identified is slow tenant uptake on these new assets.
Investment Recommendation
TA Securities maintains a “BUY” recommendation for Axis REIT, with a target price of MYR2.23, representing a 5% upside and implying a c.5% FY25F yield. The investment bank believes this valuation is fair, given the stable outlook for the REIT’s industrial assets and a spread of 120bps over the 10-year Malaysian Government Bond yield.
