KUALA LUMPUR: Affin Hwang Capital research maintained its buy call on KLCC Property Stapled Group following a solid result for its 2019 financial year.
"Overall, the results were within our expectations but below consensus forecasts," it said in a note.
"We continue to like KLCC REIT for its defensive rental income, backed by triple net leases, high asset occupancy and sustainable yields in times of an economic downturn.
"At a 5.0% 2020E yield, valuation looks attractive considering its defensive earnings and steady DPS growth," it added.
The research house maintained the target price at RM8.90.
To recap, the group's 4Q19 core net profit was up 2.7% quarter-on-quarter on the back of higher revenue contributions from the retail and hotel segments, which more than offset a slight decrease in office revenue.
For the full year, the group's core net profit was up 0.8% year-on-year to RM732.1mil on the back of 1.2% higher revenue and stable NPI margin of 72%.
Higher earnings were reported across the group's segments with retail delivering a 2.3% y-o-y increase to RM514.7mil despite the reconfiguration exercise at the mall.
According to Affin Hwang, Phase 1 of the reconfiguration exervise has been completed although the opening has been slightly delayed due to approvals from the authority.
The Phase 2 reconfiguration will commence in early February and is scheduled to open in 2Q2020.
Affin Hwang maintains 'buy' on KLCCPSG, TP at RM8.90
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