CIMB Research said KLCC Property Holdings (KLCCP) share price performance would likely be subdued, given the lack of fresh catalysts, coupled with the market’s current lacklustre interest in real estate investment trust (REIT).
The research house maintains its “hold” call on the stock with target price raised from RM6.40 to RM6.90.
KLCCP’s third quarter 2014 (3Q2014) year-on-year (yoy) revenue grew by 3.2 per cent, driven by growth in its retail, hotel and management services by 5.5 per cent, 2.5 per cent and 6.2 per cent, respectively.
Higher rental rates underpinned by the rental of its new outlets and rental reversions of existing outlets are the main factors for its retail revenue growth.
KLCCP’s hotel operations growth was influenced by the hotels food and beve-
rage (F&B) segment, coupled with higher revenues due to the opening of the ball-
room facilites after the completion of renovation.
KLCCP’s 3Q14 profit before tax grew by 3.6 per cent in line with its revenue growth.
KLCCP will start construction on Menara Dayabumi Phase 3 in Kuala Lumpur next year, after recently obtaining the final investment decision (FID) on the project, said CIMB Research.
The research house said the phase involves redevelopment of Citipoint Podium into a 60-storey tower which comprises 600,000 sq ft office space and a 500-room hotel.
KLCCP has already secured the tenant for the office space while the hotel operator has been identified. The project is expected to be completed by end-2018.