IGB REIT 3Q23 results and 3rd interim gross DPU of 2.60sen were in line with market expectations, Maybank IB says YoY bottomline growth was mainly encouraged by sustained occupancy rates and positive rental reversions at both prime malls. The house is tweaking the FY23/24/25E earnings -3%/-1%/-1%, but maintains DDM-TP of MYR1.70.
Excluding revaluation gains of MYR161.8m, 3Q23 core net profit was MYR88.9m (+7% YoY, +10% QoQ), bringing 9M23 core net profit to MYR266.1m (+6% YoY) at 72%/74% consensus’ full-year estimates. Higher YoY earnings for 3Q23 were mainly supported by improved revenue (+7% YoY) due to sustained occupancy rates positive rental reversions, and marginally lower opex (-1% YoY). Similarly, QoQ earnings growth was driven by higher rental income and lower opex.
Earnings outlook remains unchanged, IGBREIT’s investment thesis is mainly premised on Mid Valley Megamall and The Garden Mall’s resilient earnings. Maybank IB believes demand for both malls’ retail space would remain high due to their prime locations, which in turn, support high occupancy rates and rental rate growths.
Meanwhile, the house does not anticipate the injection of Mid Valley Southkey Mall in Johor Bahru, to happen anytime soon as it awaits another rental cycle due in 2025. IGBREIT’s gross gearing has remained low at 0.22x as of end-3Q23.
