Buying frenzy of IGB-REIT amid rating upgrades
At least six investment banks, including JP Morgan, have upgraded their ratings on the stock to 'buy'.
This was following the news of IGB-REIT's proposed acquisition of the Mid Valley Southkey Mall (MVS) in Johor for RM2.65bil.
Riding on the positive sentiment, shares of IGB-REIT's parent – IGB Bhd – also rose to a new record-high yesterday.
The parent owns 47.87% of IGB-REIT.
Analysts have revised their earnings forecasts of IGB-REIT upward, factoring in the future contributions from MVS Mall. As a result, target prices have also been raised.
AmInvestment Research has the highest target price at RM2.81 per unit.
IGB-REIT closed at RM2.49 yesterday after the stock rose by 9.2%.
IGB Bhd, on the other hand, moved north by 6.4% to close at RM2.83.
In a note, Kenanga Research said it is positive on the proposed acquisition, pointing out that it will strategically position IGB-REIT to benefit from key growth catalysts in Johor.
The research house has maintained its earnings forecasts for the financial year of 2025 (FY25), considering the acquisition may only be completed in the fourth quarter ending Dec 31.
Hence, the full earnings implication would be only seen from FY26.
'(We) raise FY26's by 34% to incorporate the earnings contribution from the proposed acquisition.
'To exercise prudence, we are assuming flat growth in MVS Mall also to reflect macro headwinds such as the 8% sales and service tax on rental and upcoming RON95 subsidy removal.
'Based on our estimated FY26 net property income (NPI) of RM191mil from MVS Mall, it would make up 26% of IGB-REIT's NPI, behind Mid Valley Megamall's RM399.5mil (55%) and The Gardens Mall's RM137.7mil (19%),' Kenanga Research said.
Kenanga Research has maintained its 'market perform' call on IGB-REIT, with a higher target price of RM2.40 per unit.
Meanwhile, RHB Research upgraded its rating to 'buy' and raised the target price to RM2.60.
'We raise our FY26 to FY27 earnings forecasts by 36% for each year.
'However, after accounting for the higher share base, our distribution per unit estimates increased by 12.5% for FY26 to FY27.'
RHB Research opined that the acquisition of the MVS Mall provides a key re-rating catalyst, offering IGB-REIT a significant bump via inorganic growth and the opportunity to diversify its earnings base in the long term.
The acquisition of the property would significantly help diversify the REIT's earnings profile away from the more mature Klang Valley market to now include the growing Johor Baru market.
Opened in 2019, MVS Mall has a net lettable area of 1.5 million sq ft as compared to Mid Valley Megamall's 1.8 million sq ft.
On June 24, IGB-REIT announced that it will finance the acquisition of MVS Mall with a combination of borrowings and a unit placement.
A total of RM1bil of the purchase price will be funded via medium-term notes, while the balance RM1.65bil will be raised from the issuance of 699 million new units at an issue price of RM2.36.
Post-acquisition, IGB-REIT's gearing is expected to rise marginally to 0.26 times from 0.21 times at end-March.
Regardless, Maybank Investment Bank Research (Maybank IB) said there will still be ample headroom for future acquisitions. 'We are upbeat on IGB-REIT's longer-term outlook, backed by its enlarged portfolio of high-quality retail assets.
'MVS Mall's injection has been long awaited. Its integration within the Southkey development, which includes office towers, hotels and residential units, is expected to drive consistent footfall and retail traffic, supporting occupancy and rental stability.
'Coupled with the mall's proximity to Singapore, we see upside to valuations over time.'
Maybank IB raised its FY25, FY26 and FY27 net profit forecasts by 2.5%, 34.9% and 35.6%, respectively, to mainly reflect contributions from MVS Mall, offset partially by finance costs.
It also upgraded its call to 'buy' and lifted target price to RM2.56 per unit.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
31 minutes ago
- The Star
Digital payments to surge in Malaysia
KUALA LUMPUR, July 23 (Xinhua) -- Digital payment adoption is set to surge in Malaysia, with more consumers likely to use emerging digital payment methods in the next year, a new research conducted by Mastercard showed. The research, which surveyed consumers across the globe on payment preferences, has found that some 63 percent of Malaysian consumers prefer using new and innovative methods such as Tap & Go mobile payments, biometric payments, QR codes and mobile wallets, over traditional methods like cash or manual card entry, reflecting a widespread appetite for innovation. The research showed that Malaysian consumers are among the most enthusiastic to embrace payment innovation, as 93 percent are likely to use five or more payment methods in the next 12 months. While cash is still Malaysia's most used payment method, 70 percent of consumers used it in the last year, narrowly edging out QR code payments with 64 percent, usage of digital payment methods is set to rise in the next year. This preference for innovation applies to other emerging technologies as well, with 89 percent of Malaysian consumers saying they are keen to use artificial intelligence (AI) to manage their finances, particularly for fraud detection, payment automation, product personalization, and predicting financial outcomes. Meanwhile, as payment options grow, consumers are seeking hyper-convenient ways to manage money that fit seamlessly with their digital usage habits, the research revealed. It highlighted they want flexibility to customize how they pay, tapping into digitally native methods like peer-to-peer or peer-to-merchant payments, QR codes, wearables, and social commerce. "These findings reaffirm that the digital evolution in payments has firmly taken center stage in Malaysia. With digital-first and mobile-first lifestyles shaping consumer behavior, innovation and security in payments will be key to sustaining this momentum," said Beena Pothen, country manager of Malaysia & Brunei at Mastercard.
The Star
3 hours ago
- The Star
Asean News Headlines at 10pm on Wednesday (July 23, 2025)
Malaysia * Over 4,000 new positions for government doctors, says PM * Penang undersea tunnel case: Guan Eng told me to open bank account to channel funds, says witness * Parliament approves Auditor-General's Report 2/2025 * Maxim and InDrive allowed to resume operations under Apad's watchful eye * Only the guilty need immunity, says Dr M on Batu Putih issue * Ahmad Ramdzan appointed new Malaysian Institute of Integrity president and CEO * Almost 1,200 summonses issued since July 1 for not wearing seat belts on buses * Cops investigating possibility toddler mauled to death by dogs in Sg Buloh * Teenager killed in crash after motorcycle tyre bursts * I did not search nearby garden where his body was found, says Zayn Rayyan's mother * Shop at airports across Malaysia to win your dream ride * ISPCA urges transparency on SOP for euthanising stray dogs * JPJ introduces new ruling for electrical wiring work in all buses * 85% of peninsula users won't be impacted by new power tariff, says Fadillah * Bosses must observe Sept 15 holiday or offer compensation, says HR Minister * 941,000 users to benefit from toll hike freeze, says Nanta * Jualan Rahmah Madani initiative to be enhanced, says PM * Sept 15 declared public holiday * Govt taking steps to keep food price hikes in check after SST expansion, Dewan Rakyat told * RON95 petrol price to be lowered to RM1.99 per litre for eligible Malaysians * Putrajaya postpones toll hikes for 10 highways, says PM Anwar Singapore * Singapore warehouse owner and tenant sue each other over fire in 2020, judge awards landlord S$814 * Singapore's core inflation rises 0.6% y-o-y in June, lower than poll forecast * Singapore, Vietnam agree to step up defence ties, dialogue between leaders * Two found dead after fire in Toa Payoh flat Indonesia * Indonesian police arrest 44 people suspected of starting forest fires * Indonesian President Prabowo urges budget reform, deregulation to spur economic growth * ADB chief supports Timor-Leste's Asean bid, pledges stronger development ties * Indonesian military's new pharma role sparks fears of expanded powers * Indonesia monitors former marine who joined Russian mercenary group * Indonesia to cut tariffs, non-tariff barriers in US trade deal, Trump official says Thailand * Thailand recalls ambassador, expels Cambodian envoy in border row * Thai Central Investigation Bureau passes on 14 complaints against PM Paetongtarn over Hun Sen clip to National Anti-Corruption Commission * Thailand recalls ambassador to Cambodia amid border tensions, ruling party says * Seven northern roads impassable due to impact of storm Wipha * Phumtham confident Paetongtarn will survive Constitutional Court case * Thaksin's dinner diplomacy: a show of unity or a fight for survival? * Tropical storm Wipha weakens, heavy rain and strong winds expected across Thailand * Blast sparks new tensions Philippines * News Analysis - Philippines gets minor US tariff cut, but defence ties remain intact * Wading in floodwater amid a deluge, a couple in the Philippines tie the knot * Fishing boat with 40,000 litres of automotive oil sinks off Batangas * US-Philippines trade talks yield modest tariff shift after Trump-Marcos meeting * Radio journalist shot dead in Mindanao Vietnam * Over 420 homes damaged, reservoirs overwhelmed in Vietnam amid Wipha's aftermath * Vietnam PM urges stronger investment in waterway transport to boost logistics Myanmar * Chinese student in Myanmar scam freed after gang realises he has 'bright future' * Myanmar junta drone crashes over Thai border * Wipha brings rain, risk and ruin Cambodia * Asean calls for joint natural disaster strategies as regional exercises kick off * This time we're serious says Cambodia: Online scam detainees pass over 3,000 in latest campaign Laos * Laos to boost health system against climate change * Laos and Australia deepen investment and development ties Brunei * Brunei youth emerges champ in cross-border Chess Blitz championship Aseanplus * National security under threat from foreign intelligence agencies, says IGP * India brothers marry same woman in ancient custom defying legal ban, and sparking criticism * Aaron-Wooi Yik eye strong run after smashing start at China Open * K-pop star G-Dragon appointed honorary ambassador for Apec Summit * HK actor Edison Chen caught in public argument, a month after clashing with flight attendant * Teacher dies saving students from inferno in Bangladesh jet crash * Chow Yun Fat has no problem taking photos with fans, even encourages to post online * Indian police arrest a suspected scammer running a fake embassy near New Delhi * Malaysia, South Korea to expand cooperation, says Anwar * Ringgit extends gains as govt initiatives, US-Japan trade deal lift sentiment * India extends airspace ban on Pakistani airlines, military aircraft * Fuel prices July 24-30: Unchanged across the board * China says it spoke with neighbours on planned mega-dam's impacts * Japan's Hokkaido sizzles as heat stroke alerts issued * Pakistani man charged with sodomy, sexual assault and robbery * Retrial opens for S. Korean woman who bit off attempted rapist's tongue * China says US withdrawal from Unesco not behaviour of 'responsible country' * South Korea sees record birth rate growth for Jan-May * Hongkong Post online portal hacked, potentially exposing personal data of users * Chinese 'military officer' dates man for eight years, vanishes with US$91,000 * Hong Kong back in full swing after Typhoon Wipha as businesses assess damage * Gripping new Korean drama 'The Defects' that tackles a modern-day illegal adoption ring makes its way to Tonton * India to resume issuing tourist visas to Chinese citizens * Record heat in China strains power grid, stirs health fears * Aaron-Wooi Yik advance, Soon Huat-Shevon out of China Open * Incentives prove country's strong economic fundamentals, says Hajiji * This is a 'Sweet Spot' - Singapore-based Matilde G drops the summer's most irresistible pop surprise for music fans * Trump piles up trade deals as Asia agrees to open up to American goods: Analysis * Chemical spill drill on Second Link tests Malaysia-Singapore readiness * Can BTS' agency make next 'KPop Demon Hunters'? New film in works with Paramount * PayPal to launch cross-border platform with link to India's UPI payments system * Bursa Malaysia gains at midday as fuel price assurance boosts consumer stocks * Japan PM plans to resign after election debacle: local media * M'sia to sign UN Convention on cybercrime in October, Dewan Rakyat told * Sze Fei-Izzuddin crash out in first round of China Open * Organiser denies claims of Chinese-only language, ticket scalping at G-Dragon KL concerts * Ringgit firmer against US$ in early trade * Slow start on Bursa despite Japan-US trade relief * Nikkei rally buoys Asian shares as Trump announces Japan trade deal * Reaction to U.S. trade deal with Japan * Malaysia's financial fundamentals draw IMF praise * Trump says trade deal struck with Japan includes 15% tariff * Japan's PM Ishiba denies he has decided to quit * Oil prices fall as key trade talks falter * Landslide kills at least three * Top cop set for historic sacking over crime links * Mumbai train blast convicts walk free * Day of mourning and anger * Political adviser booted over graft and superstition * All-out effort to find those missing after floods * Stranded fighter jet departs after repairs and social media fame * Families denounce report blaming pilot error
New Straits Times
4 hours ago
- New Straits Times
Gig workers coalition welcomes RON95 price reduction, toll freeze
KUALA LUMPUR: The eHailing Malaysia Coalition (Gem) has welcomed the government's announcement on the reduction of RON95 petrol price and the continuation of current toll rates, calling it a positive step that offers temporary relief to gig workers. Gem chief activist Jose Rizal said the announcement by Prime Minister Datuk Seri Anwar Ibrahim would slightly ease the daily cost burden faced by e-hailing and p-hailing drivers, many of whom operate on tight margins. "Alhamdulillah, Gem welcomes the Prime Minister's announcement on the RON95 price reduction and toll rate retention. It is a positive move that brings some relief to the e-hailing and p-hailing community in dealing with daily cost pressures," he told the New Straits Times. Earlier, Anwar announced that toll rates for 10 highways would remain unchanged this year. The price of RON95 petrol will also be reduced to RM1.99 per litre when fuel subsidies are rationalised. However, Jose said the impact of the government's move remained relative and subjective, given that wage rates were still dictated by platform companies and regulated by the Land Public Transport Agency (Apad) under the Transport Ministry. "To date, Apad continues to be seen as rigid and unresponsive to our many demands," he said. He said what the community truly needed was a structural change in wage protection, and urged the government to fast-track the tabling of the Gig Workers' Bill 2025. "Gem places high hopes on the Human Resources Ministry and the commitment of Minister Steven Sim Chee Keong to table the Gig Workers Bill in the upcoming Parliament sitting. We believe this can be a real game changer for the future of the gig economy and its workers," he said. Jose added that gig workers continued to face income instability due to a lack of formal wage protection, and called for stronger regulatory intervention to ensure fairer treatment by digital platforms.
