Sunway REIT (SREIT) registered 4QFY24 realised net profit of RM94.7m (+29.1% YoY/+6.3% QoQ), largely within our and consensus expectations. The Group's full year realised profit of RM343.8m (+7.8% YoY) constituted about 100% and 98% of our and consensus estimates. Meanwhile, the Group's net property income (NPI) in 4Q FY24 rose 22% YoY to RM165.6m, bringing YTD NPI to RM569.7m (+8.1% YoY), primarily driven by newly acquired assets and robust performance from retail & hotel segments, along with resilient performance from the other segments. All told, no change to our earnings estimates and we maintain our TP of RM1.80, or pricing it at about 6% dividend yield. Given the limited share price upside, we maintain our Neutral call.

• Retail revenue increased by 20.2% YoY in 4QFY24 to RM149m, driven by full-quarter rental contributions from six hypermarkets commencing on April 2024, as well as rental income from Sunway 163 Mall starting from October 2024, along with additional contributions from Sunway Pyramid Mall following the opening of new Oasis precinct on November 2024. As a result, the retail segment's NPI leapt 30.1% YoY to RM103.5m and we expect the momentum to continue with full-year contributions from the recently acquired assets.
• Hotel segment's revenue rose 19.8% YoY in 4QFY24 to RM27.9m, underpinned by overall increase in tourism activity which was reflected in the rise in the average occupancy rate from 64% to 65% and an improvement of average room rate by 3% for FY24. As such, hotel segment's NPI rose 25% YoY to RM26.8m, with Sunway Hotel Seberang Jaya and Sunway Hotel Georgetown contributed the highest growth in terms of average room rate. We understand that the inflow of foreign tourists primarily came from Singapore, the Middle East, China, India, and Indonesia.
• Office segment's revenue dropped slightly by 2.3% in 4QFY24 to RM20.5m, with NPI dropped 4.7% YoY to RM12.4m. The weaker performance was mainly due to lower occupancy rate at Sunway Putra Tower following the relocation of a major tenant to their new office building. Separately, the Services segment registered revenue and NPI of RM9.6m for 4QFY24 (+2.3% YoY) attributed to an annual rental reversion in accordance with the master lease agreement for Sunway university & college campus.

Source: PublicInvest Research - 4 Feb 2025