KUALA LUMPUR: IGB Real Estate Investment Trust's (IGB-REIT) first quarter (Q1) ended March 31, 2024. results were in line with expectations, according to RHB Research. 

The research firm said the company's Q1 2024 net profit of RM102.3 million was in line with expectations at 27 per cent of its and the street's estimates. 

The company's revenue and NPI improved 5.1 per cent and 4.8 per cent year on year (YoY), respectively, from higher rental income, and net property income yield (NPI) rose 8 per cent quarter on quarter (QoQ) due to higher upgrading costs in Q4 2023, it said. 

Meanwhile, RHB Research expects the REIT to record mid-single-digit rental reversion growth, backed by its fully occupied malls. 

However, it said the Mid Valley Megamall's (MVM) occupancy rate has dropped to 89 per cent temporarily as it undergoes reconfiguration works to refresh its offerings. 

"Despite the potential impact on rental, we think the long-term upside to rental rates—as less space will be occupied by an anchor tenant—outweighs the relatively small, short-term cost, especially as MVM's occupancy rates are typically full.

"We expect IGB REIT to record mid-single-digit rental reversion growth in FY24. While the inflationary environment remains the biggest risk to retail sales, we think the delay in the implementation of the high-value goods tax provides temporary relief," it said. 

RHB Research has lowered its financial year 2024 (FY24) earnings estimates by 2 per cent to account for the reconfiguration work.

It has a buy call on the stock and has raised the target price to RM2.03 from RM1.98 previously.