The housing demand remain in high, but most of the buyers are just ngam ngam can afford only. Economy crisis strike, sure default

YTL project hot selling

Kenanga Investment Bank Bhd

IGB REIT: Weaker margins at key assets

• 1H13 net profit was within our and consensus estimates; higher revenues were diluted by weaker NPI margins

• Declared 3.43 sen DPU, implying 100% payout of 1H13 distributable income

• Gardens Mall to remain revenue growth driver; still see limited asset acquisition opportunities

• Maintain HOLD with RM1.40 TP

Highlights

1H13 earnings within expectations. 2Q13 net profit of RM51m was 3% higher q-o-q driven by higher revenue (+6%), but the impact was partly offset by higher operating expenses (+13%). The REIT’s revenue growth (higher percentage rent) was driven by rental income from Gardens Mall which grew 15% q-o-q to RM34m, while Mid Valley contribution only inched up 2% to RM73m due to its higher revenue and rental base. 1H13 net profit is c.50% of our and market forecasts.

Weaker margins capped Mid Valley NPI. Net property income (NPI) margin slid 2.3ppt to 65.9% from 68.2% in 2Q13 as a result of higher expenses at both Mid Valley Megamall and Gardens Mall (NPI margin decline of 1.8ppt each q-o-q). Utilities and other operating expenses (upgrade expenses and property management reimbursements) drove up costs.

Our View

Under-rented Gardens Mall. Gardens Mall will be the key earnings growth driver for IGB REIT due to its lower rental base than Mid Valley Megamall and 53% of its NLA expiring in 2013. Its current rental rates are estimated to be below RM10psf, a large discount to average rents at Pavilion KL (RM19psf) and Suria KLCC (RM22-25psf), despite its prime location. However, cash flow will remain stable, supported by Mid Valley Megamall contribution.

Recommendation

Maintain HOLD. IGB REIT lacks near-term catalysts because it does not have an attractive retail asset pipeline from its sponsor IGB Corp (comprises offices and hotel properties). In spite of low gearing of 25%, third party acquisitions would be challenging because of excessive valuations. The planned construction of Southkey Megamall in Johor is also expected to be a long-term play. Our price target is currently under review with potential downward bias.

Minor could turn into major.
Major could turn into severe.
Severe could turn into catastrophic.

Tikam your racun.

Almost all Finance counters go holand..... haizz...

buy buy buy... or bye bye bye?

what project name? so many orang kaya in M'sia?

I'm bleeding

me too. but i've decided to give it a shot after lunch. today will be do or die

This post has been edited by ivanau88: Jul 31 2013, 11:33 AM

The Fennel

me too, u got buy some good stuff today back?

Wait wait wait........... Grab a pop corn and enjoy the show.......

wear 3D spec.....

any good stuff? maybe can collect for contra

Very painful day, i picked up a few shares yesterday too

Today drop so much most probably tomorrow rebound.

need to look at Bernanke tonight..............

must not press the sell button.....

Redtone strike back..................sell or hold? dilemma

ooo u have redtone ??
congrats~! RT Proposed 1.5c Divvy... first divvy in many many years...
--
yah headache now, tonight fed meeting announcement, friday jobs report, then uncle ben retirement.. qe tapering... sigh so many things to handle in end Q3 and Q4...

some clue on tapering, i think he has his points...
http://www.cnbc.com/id/100925849

This post has been edited by mopster: Jul 31 2013, 01:17 PM

ya holding mother share should be okay for fundamental stock in long run esp those with good consistent dividend but warrant i think better cut loss