KLCCP Stapled Group’s FY17 earnings draw mixed reactions from analysts

KUALA LUMPUR (Jan 25): KLCCP Stapled Group's full year FY17 earnings drew mixed reaction from analysts, as group earnings were dragged down slightly by higher operating costs in management services.

Yesterday the group — made up of KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust — posted a full financial year (FY17) net profit of RM877.9 million, down 0.91% compared with RM885.97 million in FY16, despite revenue improving 1.7% to RM1.37 billion from RM1.34 billion.

“Stripping off fair value gains on investment properties of RM182.5 million, FY17 core net profit came in at RM695.4 million (-2.2% y-o-y). This was below our and market expectations, forming 96% and 95% of respective full-year forecasts,” CIMB Research said in a note today. 

According to Hong Leong Investment Bank Research (HLIB) however, the results were in line, accounting for 96.7% and 99.4% of and consensus full year estimates respectively. 

For KLCCP Stapled Group's fourth quarter ended Dec 31, 2017 (4QFY17), net profit remained relatively flat at RM345.52 million compared with RM347.13 million in 4QFY16, despite stronger performance in its hotel segment.

Quarterly revenue came in at RM352.07 million, up 2.1% from RM344.69 million in 4QFY16.

The higher revenue and earnings for the hotel segment came about after Mandarin Oriental Hotel, Kuala Lumpur completed the first phase of guestroom renovation, the group said.

“Going forward, we expect improved contribution from the hotel segment due to completion of renovation works and growth in tourist arrivals,” HLIB said in a note today.

Both research houses remain Hold, with CIMB’s target price unchanged at RM7.83 and HLIB’s target price unchanged at RM7.76.

“We believe KLCCP deserves to trade at a premium over its peers due to its size, prime locations and secured office assets (long-term and triple net leases), as well as strong brand name of its retail assets,” CIMB Research said. — theedgemarkets.com

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