Sunway REIT earnings revised upwards on strong retail performance
RHB Research said the company's earnings of RM98.6 million for the first quarter of 2025 (Q1 2025), an increase of 13 per cent year-on-year (YoY), were in line with expectations at 25 per cent of the firm's and street's estimates.
The growth was mainly led by the newly acquired properties, namely the six Sunway REIT Hypermarkets, Sunway 163 Mall, and Sunway Kluang Mall, alongside stronger performance from Sunway Pyramid and Sunway Carnival Mall.
This helped to offset slower performance in both the hospitality and office segments.
Excluding the newly acquired properties, the retail segment's revenue grew 13 per cent YoY in Q1 2025 due to the asset enhancement initiatives (AEI) on Sunway Pyramid and Sunway Carnival Mall and higher occupancy rates.
The firm raised its earnings forecasts for the company by two per cent for financial year 2025 (FY25) and three per cent for FY26 and FY27 after adjusting its occupancy rate and rental rate assumptions.
It added that Sunway Carnival Mall's AEI should drive higher rental rates for the mall and there is room for organic growth from Sunway Pyramid with the full-year impact of the Oasis precinct, which was only opened in November 2024.
RHB Research maintained a 'Buy' call on the stock with a target price (TP) of RM2.13.
In a separate note, Hong Leong Investment Bank (HLIB) said Sunway REIT's core net profit exceeded the firm's estimates at 28 per cent of its full-year forecast as well as consensus estimates at 27 per cent.
The firm raised its earnings forecasts for Sunway REIT by 8.4 per cent, 10.8 per cent and 11.4 per cent for FY25, FY26 and FY27, respectively, to account for the higher than expected rental reversion.
"The retail segment performed better-than-expected and management now guides for high single-digit to low-teens reversion, supported by the full reopening of Sunway Carnival Mall in about a month.
"Separately, management attributes the drop in hotel occupancy to softer demand for leisure and MICE activities during the Ramadan period. Nonetheless, we expect a recovery in the coming quarters, supported by the anticipated growth in tourist arrivals under the Visit Malaysia 2026 campaign and the mutual visa exemption between Malaysia and China," it said.
HLIB kept its 'Buy' call on the stock with a higher TP of RM2.17.
Meanwhile, CIMB Securities noted that Sunway REIT's borrowing costs grew 13 per cent YoY in the quarter under review, attributable to a higher average interest rate of 3.92 per cent and increased borrowings.
On May 2, 2025, Sunway REIT announced the disposal of Sunway University and College to Sunway College (KL) Sdn Bhd for RM613 million. As of FY24, the asset accounted for 5.6 per cent of Sunway REIT's portfolio value and contributed 6.8 per cent to its net property income.
"Targeted for completion in 2H25, the disposal is an opportunistic move to unlock asset value and is expected to generate a total gain of RM41 million. Proceeds will be utilised for yield-accretive investments, AEI, or debt repayment, which could lower gearing to 40 per cent," it added.
It maintained 'Buy' on the stock with a TP of RM2.11.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Barnama
3 days ago
- Barnama
World Tourism Day Celebration To Boost Melaka's Global Profile
MELAKA, Aug 18 (Bernama) -- The World Tourism Day (WTD) celebration in Melaka next month is expected to open wider doors for investment and international cooperation for the state in the future, said Chief Minister Datuk Seri Ab Rauf Yusoh. He said that through global publicity, it will not only attract more tourists to the state but also bring opportunities in tourism exchange, direct flights, health tourism, cruise tourism and halal tourism. 'Although this event lasts only two days, its impact could last for the next 10 years. Melaka will no longer be known solely as a UNESCO World Heritage city but as a green and smart tourism hub. 'This is an important stepping stone towards Visit Melaka Year and Visit Malaysia 2026,' he said in his speech at the Melaka Government's Monthly Assembly for August and Jalur Gemilang Flag Raising ceremony with Melaka civil servants at the Melaka International Trade Centre (MITC), Ayer Keroh, here today. Also present were Melaka State Secretary Datuk Azhar Arshad, state executive councillors, senior officials and civil servants from both state and federal levels. Elaborating further, Ab Rauf said the organisation of WTD is also a prestigious recognition from the United Nations World Tourism Organisation (UNWTO), placing Melaka on the global stage alongside other top tourist destinations. 'This event only takes place in selected cities each year, and this is our moment to showcase Melaka to the world. With this opportunity, Melaka continues to strengthen its image, enhance attractions, and boost competitiveness not only for the state's tourism but also for Malaysia in the eyes of the world. 'The benefits are clear. The state's economy and Melaka's 1.05 million people will feel it. More tourists mean more hotel bookings, more job opportunities — from event management, hospitality, and Technical and Vocational Education and Training (TVET) volunteers to small businesses. 'The local community, meanwhile, can sell local products, culture, and authentic experiences. This is what the state government wants to bring… we are not just bringing in tourism, but in truth, we want to uplift traders and the entire local economy. Such opportunities do not come often… therefore, the state government will make the best possible preparations,' he said.
New Straits Times
3 days ago
- New Straits Times
Analysts stay bullish on Heineken Malaysia despite earnings miss
KUALA LUMPUR: Analysts are maintaining their Buy calls on Heineken Malaysia Bhd, saying that recent price adjustments and a more premium product mix will continue to support the brewer's profit margins. RHB Investment Bank Bhd (RHB IB) noted that easing input costs and favourable forex movements should provide further uplift, even as macroeconomic headwinds and weak consumer sentiment weigh on consumption in the second half of 2025 (2H25). "As such, Heineken Malaysia's mitigation strategies are expected to revolve around consumer engagement, innovative product launches and disciplined cost management," it said in a note. The research house pointed out additional catalysts such as the strong rebound in tourist arrivals ahead of Visit Malaysia 2026 and the continued effective crackdown on contraband trade. RHB IB lowered its target price to RM30.50 from RM31.30 but reaffirmed its Buy call, saying the brewer's first-half 2025 results fell short of expectations due to softer-than-expected sales. "We believe the recent stock sell-off is unwarranted and its current valuation is compelling, in view of its resilient earnings and generous dividends, notwithstanding the cautious consumer sentiment and environment of rising costs," it added. Meanwhile, Hong Leong Investment Bank Bhd (HLIB) has cut its earnings per share forecasts for the financial years 2025, 2026, and 2027 by 5 per cent, 4 per cent, and 4 per cent, respectively, citing the recent earnings shortfall. It added that following Heineken's 2 to 8 per cent beer price hike, some frontloading of volumes is expected in the next quarter, consistent with past trends. "While the financial impact of past price increases on brewers has generally been neutral rather than negative, supported by relatively inelastic demand, Heineken Malaysia's ongoing spending in digital infrastructure could weigh on its near-term profitability. The research house, which expects related costs to persist beyond 2H25, cut its target price sharply to RM27.14 from RM35.56.
The Sun
3 days ago
- The Sun
M'sian man criticises VM2026 billboards' simple design and domestic promotion
A Malaysian man recently shared his grouses over the Visit Malaysia 2026 billboards, criticising its simple and plain design. Shared on Threads, an image of the billboard attached showed the Visit Malaysia 2026 logo alongside its mascots, two sun bears, official website and social media tags all in front of a plain white background. 'First of all, the billboard's message is empty. Logo, tagline and mascots but that's it? There are no iconic pictures, no beautiful scenery, nothing that makes people say 'Wow. I want to go to Malaysia',' said the post. The second pointed shared was the location of the billboards, he was wondering what is the point of promoting Malaysia to its own people when the main target market is international tourists. He also raised the budget, saying that the millions of ringgit spent was wasted on promoting it in Malaysia. 'When I look back on it, this campaign feels like Malaysia promoting Malaysia to Malaysians. 'Who approved of this strategy and what is the actual return on investment (ROI) in putting these billboards in (Malaysia)? If they want to attract tourists, showcase Malaysia at a global stage, not to Malaysians who are already in Malaysia,' he added. While many shared similar sentiments, other users shared that the government has made efforts to promote Malaysia's tourism in different countries such as Kazakhstan, Dubai and London. Others also shared their own thoughts on the placements and design, with some believing that the local VM2026 billboards could serve as an effort to encourage domestic tourism while in regards to the design, some believe that the minimalist design was easier on the eyes especially since the billboards are placed on highways and major roads. Meanwhile, commenters also speculated that the simple design could be a teaser to raise awareness of the Malaysian government's tourism campaign for VM2026. 'I believe that the billboard is a teaser meant to raise awareness among Malaysians — a straightforward message.A billboard full of design elements doesn't necessarily determine whether people will be interested, let alone make them stop and stare at it for a long time, especially in high-traffic areas,' said a user. 'Personally, I believe that the billboard is not a full-on advertisement but could be a teaser and tourism campaigns are executed in phases. The current billboards are probably at the awareness phase,' a commenter speculated. 'I reckon the marketing agency designed this advertisment with mascots, typography, a tagline, and a white background to keep it simple and minimalistic because our brains notice clean, simple designs more easily, especially in busy places like streets or city areas,' another commented.
