(REIT) as it factored in higher rebates and a lower rental rate."We cut our FY20–22 distributable income by 25.1%, 4.0% and 3.4% respectively. We have factored in higher rebates for FY20 (28% from 20%) while lowering our average FY21–FY22 rental rate by 3%," it said.
COnsequently, AmInvestment lowered its fair value on the counter to RM1.91 from RM1.99 previously.
"At its current price, the stock offers a potential upside of 19.4%, hence we maintain our BUY recommendation," it said.
Yesterday, Pavilion REIT announced a 38.7% year-on-year (y-o-y) slump in 1HFY20 revenue to RM181mil, while distributable income fell 63.4% y-o-y to RM49.1mil.
This was below AmInvestment's and consensus expectations at 24% and 27% of their respective full-year estimates.
The weaker revenue was mainly due to the enforcement of the movement control order (MCO), further rent rebates given to tenants of non-essential services and supplies, and lower income from car park and advertisements.
For 2QFY20, Pavilion REIT proposed a distribution of 0.4 sen per unit versus 2.03 sen per unit in the same quarter last year.
AmInvestment lowered its FY20-FY22 distribution forecast to 5.1 sen, and 8.6 sen and 8.8 sen respectively.
According to the research house, Pavilion REIT discontinued its rebates after June and maintained a strong occupancy rate of 96.4% as at June vs previous year's 95.6%.