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Analysts keep 'buy' on AIMS APAC REIT after 2QFY22 results; Maybank ups TP to $1.65

Felicia Tan
Felicia Tan10/15/2021 02:47 PM GMT+08  • 2 min read
Analysts keep 'buy' on AIMS APAC REIT after 2QFY22 results; Maybank ups TP to $1.65
The REIT's results for the 2QFY2022 stood in line with the analysts' expectations.
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Analysts from Maybank Kim Eng Research and RHB Group Research are keeping “buy” on AIMS APAC REIT (AA REIT) after the REIT delivered strong results for the 2QFY2022 on Oct 13.

For the quarter, the REIT reported distribution per unit (DPU) of 2.50 cents for the 2QFY2022 ended September.

This brings DPU for the 1HFY2022 to 4.75 cents.

During the quarter, the REIT also registered better portfolio occupancy and rental reversion.

“Fundamentals are improving with buoyant logistics demand ([around] 50% of gross rental income),” says Maybank Kim Eng analyst Chua Su Tye.

In his report dated Oct 13, Chua has upped his target price estimate to $1.65 from $1.60 previously.

See: AIMS APAC REIT's 2QFY2022 DPU up by 25.0% to 2.50 cents on higher revenue, NPI

He has also raised his earnings estimates from FY2023 to FY2024 by 2% on stronger rental growth assumptions.

The REIT’s Woolworths’ acquisition should also lift its Australian contribution from 22% to 38% of its assets under management (AUM), boost DPUs by 405% and strengthen income visibility, writes Chua.

“For now, valuations are undemanding at 6.7% FY2022 DPU yield, and 1.0 times price-to-book (P/B),” he adds.

Chua is also positive on the REIT’s rental reversion, seeing it improving into the 2HFY2022.

As it is, the REIT reported portfolio rental reversion of 2.1% in the 2QFY2022, up from 0.4% in the 1QFY2022.

To this end, AA REIT’s balance sheet “remains sound”, to which Chua expects “management could look to add further [acquisitions] in its core markets”.

RHB analyst Vijay Natarajan has kept his target price of $1.72 as the REIT’s 2QFY2022 DPU stood in line with his expectations.

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He has also kept his earnings estimates unchanged.

“[AA REIT’s] valuation remains compelling, at 1 times P/BV (sector average: 1.5 times) and offering a 7% FY2022 (Mar) yield,” he writes in an Oct 13 report.

AA REIT’s operating metrics were also positive, with a healthy occupancy rate improvement, positive rental reversions, and an increase in asset value, he notes.

In addition, contributions from the REIT’s Woolworths’ acquisition should kick in this quarter, further boosting its DPU.

As at 2.47pm, units in AA REIT are trading 1 cent lower or 0.67% down at $1.49, or 1.05 times P/B.

Photo: AA REIT

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