Saham: KLSE-IGBREIT - PT. Igb Real Estate Investment Trust

Modest Increase in Kuala Lumpur's Office Occupancy and Rental Rates

Kuala Lumpur's office market continues to show resilience amid challenges in the broader Asia-Pacific region, although its vacancy rate remains higher than that of its regional counterparts.

Knight Frank Malaysia senior executive director of office and strategy solutions, Teh Young Khean, said this presents a good opportunity for tenants to upgrade or reconfigure their office spaces to align with the latest trend for employment growth sustainability and talent retention.
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"Overall occupancy rate and rental rates have shown a slight uptick due to positive take-up in KL City Centre, especially Tun Razak Exchange (TRX)," he said.
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The real estate consultant said rental rates face some downward pressure; prime Grade A office buildings in key areas like Mid Valley City, KL Eco City, KL Sentral, and Bangsar South in the KL Fringe, as well as TRX in the city centre, continue to draw interest from new tenants and companies consolidating operations.
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"The market's resilience is further supported by Malaysia's stable economic outlook, which fosters business expansion and employment growth," it adds.
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According to Knight Frank, workplace strategy trends are shaping office demand across Malaysia and the region, with companies prioritising sustainability, wellness features, and hybrid-working adaptability.
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"While landlords face increasing competition, those that proactively invest in improving their buildings and offering greater flexibility in lease structures will remain competitive.
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"Looking ahead, we anticipate demand for high-quality office space to persist, particularly from businesses prioritising environmental, social, and governance (ESG) objectives and employee well-being," its group managing director Keith Ooi said.
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In the Asia-Pacific region, the office market is expected to undergo significant transformations in 2025, with prime Grade A office space increasing by 7 per cent, up from 4 per cent in 2024.
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Knight Frank said more than 40 per cent of this new supply will be delivered to mainland Chinese markets, which remain under pressure due to economic headwinds.
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Christine Li, head of research for Asia-Pacific, said the rest of the region is still expected to see moderate increases of one to two per cent, with leasing volumes anchored by markets in India.

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)

Source: NSTP

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by Maybank

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by RHB

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by Maybank

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by HLIB

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by Kenanga

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Love the stock. Hate the price. Will acquire at half price.

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by RHB
Neutral – TP RM2.12

“Positive Outlook In The Price; D/G To NEUTRAL"

Downgrade to NEUTRAL from Buy, with new DDM-derived MYR2.12 TP (from MYR2.03), 9% upside and c.6% yield. IGB REIT’s 1H24 results were in line with expectations, recording healthy YoY income growth from its positive rental reversions. 2H24 should also see higher rental rates from the completed reconfiguration works at Mid Valley Megamall (MVM). Following a strong share price performance over the past year, we downgrade our rating as we think the upside is limited at this juncture.

Analysts:
Wan Muhammad Ammar Affan
ammaraffan@rhbgroup.com
Loong Kok Wen CFA
loong.kok.wen@rhbgroup.com

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by Public
Neutral – TP RM1.85

“Fully-Occupied Again"

IGB Real Estate Investment Trust (IGBREIT) netted 2QFY24 realised net profit of RM88.2m (+8.5% YoY, -13.8% QoQ) which is largely within our and consensus expectations. YTD, Group 1HFY24 realised net profit of RM190.5m (+7.5% YoY) constituted about 49.5% and 50.5% of our and consensus full year estimates. Based on the latest valuation reports, the fair value of Mid Valley Megamall (MVM) and The Gardens Mall (TGM) remained at RM3.79bn and RM1.40bn respectively, unchanged from the previous quarter though it expensed off RM6.6m for subsequent capital expenditures. In 1HFY24, the Group’s total revenue rose 5.5% YoY to RM312.5m while net property income (NPI) was higher by 5.6% YoY to RM233.7m and profit after taxation was RM181.2m (+2.2% YoY) The higher total revenue, net property income and profit after taxation were mainly due to the positive rental reversions achieved during the period. All told, we maintain our earnings estimates and reiterate our Neutral call but nudge our TP from RM1.72 to RM1.85, based on dividend yield of about 6%. The stock is fairly valued in our view given rising competition from new malls and inflationary pressure on consumer spending.

Analyst:
Tan Siang Hing
research@publicinvestbank.com.my

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by MIDF
Buy – TP RM2.10

“Positive Outlook"

Maintain BUY with a revised TP of RM2.10. We revise our TP for IGB REIT to RM2.10 from RM2.04 as we assume higher terminal growth rate for our Dividend Discount Model in view of the stable earnings outlook for IGB REIT. We continue to favour IGB REIT for its resilient earnings outlook which is supported by the good quality of its retail assets. Hence, we maintain our BUY call on IGB REIT. Meanwhile, distribution yield is estimated at 4.9%.

Analyst:
Jessica Low Jze Tieng
jessica.low@midf.com.my

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by Maybank
Buy – TP RM2.15

“2Q24 on track; U/G to BUY"

2Q24 results and 2nd gross DPU of 2.56sen were in line. The YoY bottomline growth was mainly encouraged by sustained occupancy rates and positive rental reversions at both prime malls. We upgrade IGBREIT to BUY with a raised DDM-TP of MYR2.15 (+40sen; Ke: 6.9%), after revising our valuation parameters. We are positive on its resilient earnings, which are supported by its two prime malls.

Analyst:
Nur Farah Syifaa
nurfarahsyifaa.mohamadfuad@maybank-ib.com

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by Kenanga
Market Perform – TP RM1.77

“Positive Rental Reversions"

IGBREIT's 1HFY24 results and distribution beat expectations due to stronger-than-expected rental reversions, which also drove an 8% YoY growth in its core net profit. Mid Valley Megamall is returning to full occupancy with new tenants taking up the floor space vacated by Metrojaya. We raise our FY24F-25F earnings forecasts by 3% and 15%, respectively, lift our TP by 5% to RM1.77 (from RM1.68) and maintain our MARKET PERFORM call.

Analyst:
Clement Chua
clement.chua@kenanga.com.my

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)
Research by HLIB
Hold – TP RM1.87

“Results within expectations"

IGB REIT recorded 2Q24 core net profit of RM88.2m (-13.9% QoQ, +8.9% YoY), lifting 1H24’s sum to RM190.5m (+7.5% YoY). This came in within ours and consensus forecasts at 51% of full year forecast. Declared DPU of 2.56 sen in 2Q24. Management guided that reconfiguration works for Metrojaya have been completed, with the space having leased out fully, resulting in Mid Valley returning to full occupancy rate. Nonetheless, with the recent rise in share price, we think that its risk to reward profile seems fair at current juncture. Hence, we downgrade to HOLD with a lower TP of RM1.87.

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

$IGBREIT / 5227 (IGB REAL ESTATE INVESTMENT TRUST)