[%WUUl%]
Research by HLIB
Sell (from Hold) – TP RM0.50

“Impacted by higher costs"

Hektar’s 1Q24 core net profit came in at RM5.1m (+1.4x QoQ, -44.8% YoY). This came in below ours and consensus estimates at 16% of full year forecast. The negative deviation was due to higher-than-expected finance costs. In view of the results shortfall, we cut our FY24/25 forecasts by -5.4%/-5.2%. We also introduce FY26 forecasts. Besides, the increase in units in circulation after its private placement has resulted in our forecasted FY24/25 EPU to decline by -22%/-23% post earnings cut due to dilution. Although there are some positives regarding its outlook – potential positive spill-over effects to its retail assets from the introduction of flexible EPF “Account 3” and higher civil servant pay – its current yield valuations seems narrow relative to its historical range. Downgrade to SELL with a lower TP of RM0.50.

Analyst:
Tan Je Jyne
[%doOM%]

$KLSE-HEKTAR
Research by HLIB
Sell (from Hold) – TP RM0.50

“Impacted by higher costs"

Hektar’s 1Q24 core net profit came in at RM5.1m (+1.4x QoQ, -44.8% YoY). This came in below ours and consensus estimates at 16% of full year forecast. The negative deviation was due to higher-than-expected finance costs. In view of the results shortfall, we cut our FY24/25 forecasts by -5.4%/-5.2%. We also introduce FY26 forecasts. Besides, the increase in units in circulation after its private placement has resulted in our forecasted FY24/25 EPU to decline by -22%/-23% post earnings cut due to dilution. Although there are some positives regarding its outlook – potential positive spill-over effects to its retail assets from the introduction of flexible EPF “Account 3” and higher civil servant pay – its current yield valuations seems narrow relative to its historical range. Downgrade to SELL with a lower TP of RM0.50.

Analyst:
Tan Je Jyne
JJTan@hlib.hongleong.com.my

$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST)