Results above expectation; maintain HOLD
1Q22 results were above our and consensus’ expectations at 29%/30%
respectively. Earnings growth was mainly driven by high occupancies at
both Mid Valley Megamall and The Garden Mall, as well as the absence of
rental assistance to tenants. Meanwhile, a 1
st interim gross DPU of 2.51sen
was declared. We maintain our FY22-24E earnings forecasts and DDM-TP
of MYR1.65 (ke: 7.8%). Maintain HOLD. We prefer Axis (AXRB MK, SP
MYR1.90, BUY, TP MYR2.30).
Strong NPI margin
1Q22 core net profit grew 95% YoY and 16% QoQ to MYR85.4m. YoY, bottomline earnings was driven by; (1) lower rental support provided to tenants
from the economic reopening and improving retail sales of tenants, (2)
reversal for impairment of trade receivables, and (3) high occupancies at
both MidValley Megamall and The Gardens Mall (at above 99%). As a
results, NPI margin also improved by 17.8ppts, to 80.5% (1Q21: 62.7%).
Estimates unchanged
We maintain our earnings forecasts for now. Our FY22-24E core EPU growth
of 45%/17%/4% is attributed to lower/ceasing of rental support, positive
rental reversions and sustained high occupancy rates at both malls.
Outlook remains intact
Our medium to long-term outlook for IGBREIT remains positive as the
prominent locations of its two malls will attract high shopper traffic. This,
in turn, would ensure high demand for IGBREIT’s retail spaces. In addition,
low gross gearing of 0.23x will give it room to fund sizeable acquisition(s)
of retail assets in the future.