KUALA LUMPUR (Oct 22): Axis Real Estate Investment Trust's earnings for the third quarter ended Sept 30, 2020 (3QFY20), which saw a 23.9% increase in net profit, were deemed within consensus estimates.

Hong Leong Investment Bank (HLIB) Research in a note said the group’s 3QFY20 core net profit of RM31.8 million and the cumulative nine-month (9MFY20) sum of RM92.8 million came within expectations, making up 75.1% of house estimates and 72.1% of consensus’ expectations for the forecast of the full year ending Dec 31, 2020 (FY20). 

“Overall, the improved performance was due to commencement of lease from newly acquired properties. We expect a resilient 4Q20 with contribution from the newly acquired properties,” HLIB Research said. 

Hence, HLIB Research maintained its ‘buy’ recommendation for the stock with an unchanged target price of RM2.47. 

Meanwhile, Affin Hwang Capital Research said Axis REIT's 9MFY20 net profit missed expectations, coming in at only 72% and 73% of house and street’s full-year earnings forecasts.

Affin Hwang Capital Research said the variation to its forecasts was due to the higher maintenance expense. 

As such, it has lowered its earnings per share (EPS) forecast for 2020 by 2.9% and is projecting it to deliver an EPS of 8.6 sen. This is to incorporate the higher maintenance cost and delays in completion of property acquisition due to slower progress during a pandemic period.  

However, it has maintained its EPS forecasts for 2021 and 2022, expecting them to come in at 9.6 sen and 9.9 sen, respectively. 

Similarly, MIDF Research said Axis REIT’s 9MFY20 core net income of RM92.7 million came in slightly below its expectation, making up 70% of the research house’s full-year estimate. But, it deemed the 9MFY20 results met consensus’ expectation. 

MIDF has revised downwards its earnings projection for Axis REIT, by 5% in FY20, 4.8% in FY21 and 4.1% in FY22. 

Hence, it is now anticipating the group to generate an annual net income of RM125 million for FY20, RM131 million for FY21 and RM138 million for FY22.    

Post-revision in earnings, MIDF Research has cut its target price for Axis REIT to RM1.98, from RM2.02 previously. It has kept its ‘neutral’ call on the stock as it sees limited upside while it expects the REIT’s net dividend yield to be at 3.5%. 

Meanwhile, Affin Hwang Capital Research has maintained its 'hold' call with an unchanged target price of RM1.97 on Axis REIT. At a 4.6% 2021 distribution yield, it said Axis REIT’s valuation looks fair considering its relatively stable earnings outlook.

Yesterday, Axis REIT saw its net property income for 3QFY20 rise 4.98% to RM50.26 million from RM47.87 million a year ago on higher overall trust income.

Total trust income came (NPI) in 6.13% higher at RM57.17 million compared with RM53.86 million previously.

Meanwhile, its net profit for 3QFY20 also increased 23.87% to RM32.39 million from RM26.15 million a year ago.

It declared a distribution per unit (DPU) of 2.25 sen. This brings the total DPU in the first nine months of the year to 6.5 sen, versus 7.06 sen in the corresponding period last year.

For 9MFY20, the NPI rose 2% to RM147.41 million from RM144.52 million a year earlier. Total trust income for the nine months was up 3.46% to RM167.43 million from RM161.83 million previously.

At noon break, Axis REIT was up two sen or 0.95% at RM2.13, valued at RM3.07 billion. Some 290,900 units were traded.