KUALA LUMPUR: Axis Real Estate Investment Trust's (Axis-Reit) strong appetite for yield accretive acquisitions in 2021 will drive up its financial year 2022 (FY22) revenue.
Hong Leong Investment Bank Bhd (HLIB) said Axis-Reit had been active in acquiring assets namely five properties in 2021, and so far two in 2022.
"With an acquisition target of RM400 million, Axis will stay focused in seeking for industrial type properties, while continuing to impute environmental, social and governance (ESG) elements into its operations.
"The five acquired properties in 2021 would see a full-year contribution and drive up its FY22 revenue," HLIB said in a note today.
The firm said the geographical focus of Axis-Reit's portfolio remained on the prime industrial areas in Peninsula Malaysia (as at FY21: Johor: 29 per cent, Shah Alam: 22 per cent and Petaling Jaya: 17 per cent).
These areas enjoyed healthy rental growth in past quarters and are expected to continue its momentum thanks to the strong demand.
"Pipeline of ongoing acquisitions continues to focus on these key industrial hubs," it said.
Furthermore, HLIB said prime industrial areas with healthy rental growth were expected to persist thanks to strong demand.
The firm has updated its financial model with annual report figures and incorporated contributions from new asset acquisitions.
In turn, Acis Reit's FY22-23 profit is bumped up by one per cent to 2.0 per cent but due to its placement exercise, FY22-23 earning per unit (EPU) is cut by 7.0 per cent
"Post adjustments, our target price falls to RM2.10 (from RM2.32) based on the targeted yield of 4.6 per cent on FY23 distribution per unit," said HLIB, which maintained its "Buy" call on Axis Reit.