HLIB downgrades Sentral REIT, lowers target price to 91 sen

KUALA LUMPUR (Aug 22): Hong Leong IB (HLIB) Research has downgraded Sentral REIT to “hold” at RM1.01 with a lower target price (TP) of 91 sen (from 99 sen) and said Sentral REIT recorded 2QFY22 core net profit of RM18.5 million (-9.4% q-o-q; -2.3% y-o-y) and 1HFY22 core net profit of RM38.8 million (-2% y-o-y).

In a note on Monday (Aug 22), the research house said it deems the results to be below expectations despite accounting for 45%-48% of house and consensus estimates, as it is projecting sequentially weaker quarters due to non-renewal of tenants for two of their properties.

“The marginal drop in 1HFY22 performance was due to lower rental income generated from: i) Quill Building 2 – HSBC; ii) Wisma Technip; iii) Quill Building 3 – BMW and; iv) Menara Shell, as occupancy rate decreases.

“We trim our earnings forecast by 8.9%/8.5%/5.2%, as we lower our occupancy rate assumptions, given the challenging outlook.

“We revised our TP to RM0.91 (from 99 sen) and downgrade to 'hold' (from 'buy'),” it said.