Wednesday, August 24, 2011

KLCC Property Earnings Evaluation: Results in-line

24 August 2011
Price Target: RM3.46
Share price: RM3.18


Results
1QFY11 results was in-line with HLIB and consensus estimates. Reported earnings rose 5.8% yoy and 5.0% qoq to RM240.3m, making up 22.3% of our estimate and 24.7% of consensus.

Deviations
None.

Dividends
None.

Highlights
# Maiden earnings contribution from retail element of Lot C (aka Menara 3 PETRONAS). Topline and bottomline growth were driven by positive rental reversions from Suria KLCC and Kompleks Dayabumi, and better yields from Mandarin Oriental (reflecting improved occupancy rates and ancillary income from F&B operations).

# KLCC Property’s parent company, PETRONAS has also been officially confirmed to be the tenant for Menara 3 PETRONAS. We expect the office portion to make its maiden earnings contribution in 2012.

# The financial year end has now been changed to Dec; thus KLCC Property will be reporting 9 month’s results for FY12/11.

Risks
38% EPS dilution from RCULS conversion by the parent company, KLCC Holdings.

Forecasts
No changes.

Rating - HOLD
Positives
- High occupancy rates (>90%), consistently strong human traffic and desirable tenant profile due to prestigious and desirable KLCC address.
- Stability of rental yield and scope for capital appreciation.

Negatives
- Uncertainty over extent of dilutive impact from RCULS.

Valuation
# In the absence of major catalysts, we maintain our HOLD rating and target price of RM3.46 (15% discount to RNAV).

# The RCULS issue needs to be resolved before KLCC Property can enjoy re-rating.



Source: HLIB Research

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...
 
Business