Date of Report
25 October 2024
Broker Name
UOB Kay Hian
Company Overview
Pavilion REIT is a real estate investment trust (REIT) with a portfolio that includes the iconic Pavilion Shopping Mall and the Pavilion Office Tower.
Stock Data
- Share Price: RM1.58
- Target Price: RM1.76 (Previous TP: RM1.66)
- Upside: +11.4%
- Bloomberg Ticker: PREIT MK
- Shares Issued: 3,660.7 million
- Market Cap: RM5,756.2 million (US$1,335.5 million)
- 3-Month Average Daily Turnover: US$1.5 million
- 52-Week High/Low: RM1.59 / RM1.17
Major Shareholders
- Qatar Investment Authority: 27.6%
- Lim Siew Choon: 23.1%
- Employees Provident Fund: 12.1%
Financial Performance
3Q24 Results
- Revenue: RM207.3 million (+3% QoQ, +4% YoY)
- Net Property Income (NPI): RM131.9 million (+9.8% QoQ, +8.7% YoY)
- Core PAT: RM78.9 million (+17.6% QoQ, +11.8% YoY)
- Earnings Per Unit (EPU): 2.2 sen
- Dividend Per Unit (DPU): 0.0 sen (no dividend declared for this quarter)
Key Financials (Year to 31 Dec)
| Metric |
2022 |
2023 |
2024F |
2025F |
2026F |
| Net Turnover (RMm) |
570 |
724 |
835 |
873 |
902 |
| EBITDA (RMm) |
332 |
419 |
467 |
496 |
512 |
| Net Profit (RMm) |
398 |
432 |
320 |
352 |
370 |
| EPU (sen) |
8.1 |
8.4 |
8.8 |
9.6 |
10.1 |
| DPU (sen) |
8.4 |
9.0 |
9.0 |
9.6 |
10.0 |
Stock Impact
- The results for 3Q24 were slightly below expectations due to weaker-than-expected performance from Pavilion Bukit Jalil (PBJ), which may miss its RM146 million NPI target for next year.
- The 3Q24 NPI margin improved to 63.6%, driven by higher margins from key assets like Pavilion KL, Pavilion Elite, and Intermark Mall.
- A stronger fourth quarter is anticipated due to the festive season, with occupancy at Pavilion KL remaining solid at 96.8%.
Earnings Revision/Risk
- Earnings forecasts for 2024-26 have been reduced by 2-6% due to lower expected contributions from PBJ.
- The expectation of a dilutive RM400 million placement exercise in 2025 has been removed, leading to an increase in DPU forecasts by 4-6% for 2025-26.
Valuation/Recommendation
- Maintain a “BUY” rating with a higher target price of RM1.76, based on an increased dividend forecast and a reasonable implied dividend yield of 5.5% for 2025.
