CGS CIMB has made an “Add” call to Axis Reit with a lower DDM based TP of RM2.34. The stockbroking firm said that Axis REIT is among its two preferred REIT sector picks; its growth and dividend angle provides a defensive proposition amidst the broader market uncertainties over the Russia-Ukraine geopolitical impasse
It said that the company is firmly on the recovery path in FY22F, anchored by overall improving operating conditions which showed a strong base in FY21.
The stockbroking house said that the group’s financial performance in FY21 bucked the trend among the more subdued M-REITs (office, retail, and hospitality) under coverage, with a robust +6.5% yoy increase in core net profit, driven by a higher NPI margin and +7.8% yoy growth in revenue (supported by a contribution from new acquisitions).
CGS CIMB said that it does expect the risk of rental rebates/assistance to continue in FY22F, and even so, Axis REIT’s exposure to office tenants is minimal, at less than 5% of total NLA.
“At end-FY21, the group has completed five acquisitions worth a total of RM267m, underpinning our 9.2% yoy revenue grow th in FY22F. At end-FY21, the total number of assets under its portfolio stood at 58 with an average occupancy rate of 96% (FY20: 91%). Portfolio rental reversion stood at a healthy +5.6%, despite the pandemic,” it said.
