Acquisitions forecast to lift AME-REIT's earnings
PETALING JAYA: Analysts have maintained their forecasts for AME Real Estate Investment Trust (AME-REIT) after the recent announcement of its first quarter results.
RHB Research, which raised its target price for AME-REIT to RM1.80, said the REIT's results for the first quarter of its financial year ending March 31, 2026 (1Q26) met expectations, supported by contributions from a recent acquisition.
'We turned more bullish on its valuation given wider yield spread post-rate cut in the overnight policy rate and rising investor interest in domestic-centric names.
'We like the REIT for its high debt headroom, substantial exposure to floating-rate debt (81%) that will benefit from lower rates, and sturdy sponsor-backed pipeline to tap Johor's growing industrial market,' the research house added.
At last look, the stock was at trading RM1.60.
RHB Research said it expected quarter-on-quarter earnings to improve, supported by the ongoing acquisition of properties slated for completion in 2Q26.
Beyond the immediate term, FY26 earnings should be further lifted by the full-year contribution from a recent acquisition spree, which includes five properties estimated to generate an additional RM4.5mil in FY26 gross rental income, complemented by the renewal of nine existing tenancies (27% gross rental), the research house added.
'We see room for continuing inorganic growth, supported by a low gearing level of 23%, providing financing headroom of RM220mil on top of the recent rate cut.
'Meanwhile, we view the downside risks from the sales and service tax expansion as relatively limited for AME-REIT, given its long-term master leases and a tenant profile that largely consists of established multinational companies capable of absorbing higher tax-related costs.'
RHB Research noted that on a yearly basis, 1Q26 revenue rose 14.7% to RM14.1mil, supported by additional contributions from two properties (i-Park SAC 23 and 24, and iTechValley 46) acquired in 4Q25, as well as higher rental rates from tenancy renewals.
Despite a 3.2% increase in 1Q26 core profit, net margins declined by 7.2 percentage points to 64.9%, mainly due to a rise in interest expenses following the acquisitions and higher operating costs.
The research house said risks for AME-REIT include cancellation of acquisitions, slowdown in economic growth, and lower-than-expected rental revisions.
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