IGB-REIT may see limited upside to unit price
PETALING JAYA: IGB Real Estate Investment Trust 's (IGB-REIT) unit price may have limited upside, according to Maybank Investment Bank (IB) Research.
The research house has downgraded its call on the counter to a 'hold' from an earlier 'buy' rating.
However, it has lifted its dividend discount model-based target price to RM2.83 from RM2.56 after rolling forward to financial year 2026 forecasts to reflect full contribution from the Mid Valley Southkey segment.
Southkey is expected to lift earnings from the financial year 2026 (FY26) onwards.
'While we continue to like IGB-REIT's premium mall assets, full occupancy and resilient income base, we see limited upside for now, given the share price action of more than 10% over the past month.
'At current unit price levels, IGB-REIT is trading at 3.8% and 4.4% for FY25 and FY26 forecast net yields,' it said.
Maybank IB Research said IGB-REIT's management is cautiously optimistic for the second half of the year as it anticipates a stronger fourth quarter (4Q) from year-end holiday spending and tourism.
The Mid Valley Southkey acquisition remains on track for completion in 4Q25 –assuming a 1.5-month net property income (NPI) contribution for the forecast FY25, it said.
Southkey is expected to contribute some 29% of FY26 NPI.
IGB-REIT also anticipated mid single-digit rental reversions, supported by healthy leasing momentum and anchor tenant stability, Maybank IB Research said.
Meanwhile, CGSI Research retained its 'hold' rating on IGB-REIT with a higher dividend discount model-based target price of RM2.64 per unit.
'While we remain upbeat on IGB-REIT's ability to sustain high occupancy rates and drive consistent dividend growth, its FY26 forecast yields of 4.9% lag behind the sector average of 5.6%.
'This may limit near-term upside potential, in our view,' it said.
'Upside risks include stronger tenants' sales and sooner-than-expected completion of the acquisition of Southkey, while downside risks include non-renewal of existing leases and unexpected hike in interest rates,' it added.
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