RHB Research has maintained a “Buy” recommendation for Pavilion Real Estate Investment Trust (Pavilion REIT) with a new DDM-derived TP of MYR1.55 from MYR1.48, 19% upside, and c.5% yield.
It said that Pavilion REIT posted strong earnings in line with the economic recovery, leading to a higher turnover rent portion and advertising income.
The stockbroking firm said that the reopening of international borders is a plus for the REIT with footfalls in Pavilion Kuala Lumpur still missing the tourist volume shortfall. We expect reversions to be c.3-5% in FY22, with the REIT focusing on improving occupancy.
It said that the country officially transitioning to an endemic phase and relaxation of SOPs, the outlook for the retail industry is positive.
“Management is targeting a reversion rate of between 3% and 5% in FY22 (FY21: -3%). The focus for the REIT this year will be on improving its occupancy, with Pavilion Kuala Lumpur’s occupancy dropping to c.90% from 96.5% in Dec 2020 after the recurring lockdowns of the past year, RHB Research said.
RHB Research said that it continued to like the mall’s strong positioning, as it stands to benefit from the reopening of international borders
