RHB Research has maintained a “Buy” recommendation for Axis Reit with a TP of RM2.28 from RM2.40, 24% upside with a 5% yield.
It said that it is adjusting the unit base following the conclusion of the placement exercise, paring down our DDM derived TP to MYR2.28 after ascribing a 4% ESG premium, given its ESG score of 3.2 which is above the country median.
The stockbroking house said that Axis REIT’s results are in line, underpinned by contributions from freshly acquired assets, new tenancies, and a healthy reversion rate of +5.6%.
It said that it continues to like this key player in the industrial segment, leveraging on the rise of e-commerce and demand for warehousing.
“With its acquisition target value of MYR400million, we look forward to a pick-up in its acquisition spree, while its venture into property development is laudable,” the stockbroking house said
RHB said that the REIT’s blended occupancy rate remains stable, improving to 96% in FY21 (from 91% in FY20), supported by the single-tenanted nature of its industrial assets (making up 92% of its portfolio) with 89% of leases up for expiry in FY21 having been renewed at a +5.6% reversion rate.
It said that it believes the rental reversion rate this year will be just as encouraging –in light of the e-commerce boom, as non-renewal risk remains a non-issue for the REIT, especially for the industrial asset.
It said that. Axis REIT’s most recently completed acquisition is the Xin Hwa Warehouse in Pasir Gudang, in Oct 2021. With two ongoing acquisitions in Johor now, management expects its acquisition spree to pick up pace in tandem with the broader reopening of the economy (acquisition target value of MYR400m), given its ample debt headroom (FY21 gearing: 31%).
