Kenanga Research has maintained an “Outperform” recommendation for KLCC Property Holdings Bhd with a lower TP of RM6.90 (from RM7.35).
It said that our TP is based on an unchanged FY22E GDPS/NDPS of 34.6 sen/32.4 sen on +1.1ppt yield spread to a higher 10-year MGS target of 3.90% (from 3.60%).
It said that its applied spread is on the lower-end of MREITs under our coverage at +1.1ppt (+1.0ppt to +4.5ppt) as KLCC is backed by stable office segment, triple-net-lease (TNL) structure and Shariah-compliant status while the reopening of the economy would suggest improving earnings for the retail and hospitality segments.
It said that the office segment which is KLCC’s main earnings driver remains stable backed by long-term locked-in tenancies of >15 years.
“Retail and hospitality segments outlook are looking upbeat with the reopening of malls and return of shopper traffic and as such we are expecting flattish-to-mildly positive reversions going forward. Similarly, the hotel segment is expected to see improvements this year,” it said