IGB Real Estate Investment Trust (IGBREIT) ended FY24 with 4QFY24 realised profit of RM85.5m (-8.0 YoY, -7.8% QoQ), which came in slightly below our and consensus estimates. YTD, Group FY24 realised net profit of RM368.7m (+2.6% YoY) constituted about 96% of our and consensus full year estimates. 4QFY24 revenue was flattish YoY but net property income (NPI) was lower primarily due to higher maintenance costs for mechanical and electrical (M&E) equipment, upgrading and restoration works, and marketing expenses incurred during the quarter. For the year, Group revenue rose 3.6% YoY while NPI in FY24 rose to RM455.7m from RM447.9m in FY23. Based on the latest valuation reports, the fair value of Mid Valley Megamall (MVM) and The Gardens Mall (TGM) were RM4.0bn and RM1.45bn respectively, from RM3.790bn and RM1.396bn, indicating fair value changes of RM210m and RM54m respectively. All told, we maintain our earnings estimates and reiterate our Neutral call but nudge our TP from RM1.85 to RM1.95, based on dividend yield of about 6%, based on FY25 dividend estimate. We see limited catalyst given the rising competition from new malls while consumer spending remains lacklustre due to cost inflation. As such, we maintain our Neutral call on the stock.

• FY24 revenue rose 3.6% YoY to RM604.3m, while NPI rose marginally by 1.7% to RM455.7m due to higher costs attributed to maintenance costs for mechanical and electrical (M&E) equipment, upgrading and restoration works, and marketing expenses. As such, Group profit after taxation (PAT) was RM579.8m (+12% YoY). The higher total revenue and net property income were mainly due to the higher rental income while higher PAT was mainly due to the net fair value changes of RM211.1m. The distributable income for the current year-to-date amounted to RM395.9m, consisting of a profit of RM368.7m, non-cash adjustments arising mainly from net fair value changes of RM211.1m and manager's management fee payable in Units of RM26.0m.
• Occupancies remain healthy (with Mid Valley Megamall's at 99.97% occupancy and The Gardens Mall at 99.95% occupancy). Average gross monthly rental income for Mid Valley Megamall is now at about RM18.10psf (from RM16.28psf in FY23 and RM15.28psf in FY22). Meanwhile, The Gardens Mall which is almost fully occupied at 99.95% is now commanding average rent of RM14.94psf, a slight drop from RM15.59psf in FY23 (vis-a-vis RM13.39psf in FY22). In December 2024, IGB REIT completed the South Court reconfiguration in Mid Valley Megamall.

Source: PublicInvest Research - 24 Jan 2025