Axis Real Estate Investment Trust’s (Axis Reit) 1QFY24 earnings met expectations, making up 26% and 24% of MIDF’s and consensus’ full year estimates respectively.
MIDF Research 1QFY24 Results Review said today (Apr 24), Axis REIT announced distribution per unit (DPU) of 2.3sen (ex-date: 7th May 2024) for 1QFY24.
Off to a good start in FY24. Sequentially, 1QFY24 core net income was higher at RM40.9m (+7.8%qoq) on the back of flattish topline as earnings in the previous quarter was weighed by provision of deferred tax on Real Property Gains Tax (RPGT). On yearly basis, 1QFY24 core net income was higher (+25.8%yoy), in line with higher topline (+7.7%yoy).
The topline growth was mainly contributed by commencement of lease Bukit Raja Distribution Centre 2 in August 2023. Besides, the earnings growth was also helped by lower property operating expenditure and provision for doubtful debts.
Meanwhile, earnings growth was partly negated by the higher Islamic financing cost (+11%yoy) due to higher Islamic financing rate following hike in OPR in May 2023.
Earnings forecast maintained. MIDF maintain their earnings forecast for FY24F/25F/26F.
Earnings outlook for Axis REIT is expected to be stable due to the defensive nature of its industrial assets. Rental income is expected to grow steadily due to healthy demand for industrial space and as most of its single-tenanted assets are on pre-agreed step-up rate.
Besides, its active asset acquisition will spur earnings growth as Axis REIT has total estimated value of target acquisitions of RM200m.
Note that Axis REIT announced acquisition of three industrial assets in Bukit Raja year-to-date which increase its presence in Bukit Raja significantly.
Maintain BUY with an unchanged TP of RM2.00. MIDF Research maintained their TP for Axis REIT at RM2.00 based on Dividend Discount Model (DDM). They continue to like Axis REIT for its exposure to industrial asset which underpinned by healthy demand for industrial space.
Hence, MIDF Research maintained their BUY call on Axis REIT. Meanwhile, distribution yield is estimated at 4.2%.
