Maintain BUY
We are mildly positive on Axis’ proposed acquisition of a MYR390m logistics
warehouse in Pelabuhan Tanjung Pelepas, Johor. We maintain our earnings
forecasts, DDM-TP of MYR2.30 (Ke: 6.5%) and BUY rating. We are also
keeping Axis as our sector’s top pick, on account of its resilient rental
income from industrial assets and active acquisition strategy.
Acquiring MYR390m logistics warehouse in PTP, Johor
Axis has proposed to acquire a double-storey ramp-up warehouse cum 3-
storey office (NLA: 1.15m sq.ft.) in Pelabuhan Tanjung Pelepas, Gelang
Patah, Johor for MYR390m, from Equalbase PTP Sdn. Bhd. The property is
currently built on a portion of leasehold land with an unexpired 33 years
sub-leased term. The deal also entails a 10 years leaseback agreement
with fixed rental rates ranging from MYR26m-27.9m p.a. The lessee is
primarily in the business of the building and construction of warehouses.
Axis expects the deal to be completed in mid-2022.
Yield accretive purchase
Assuming a 95% net property margin, we have derived net property yields
of 6.3%-6.8% (based on lease term of 10 years). These are higher than our
estimated WACC of 5.3% (debt:equity 40:60). No changes to our forecast,
as this deal forms part of our new acquisition assumptions. We estimate
Axis’ gross gearing will increase to 0.4x from 0.31x at end-FY21, which is
including the proposed development of the Bukit Raja Distribution Centre
2, Shah Alam (BRDC 2).
Forecast intact
We maintain our FY22-24E net profit as we have included a MYR400m
acquisition assumption for FY22E. We remain upbeat on Axis’ active
acquisition strategy on industrial assets which generally entail resilient
rental income and lower occupancy risks. To recap, YTD-FY22, Axis has
completed 2 industrial properties purchases in Johor, in March.