• Keep NEUTRAL with new DDM-derived MYR8.52 TP from MYR8.20, 2% upside. KLCCP Stapled's FY24 results were in line with expectations, reporting stronger earnings YoY driven by the retail and hospitality segments. The office segment remained stable with its long-term triple net leases, but should be boosted in FY25 from an upward rental reversion for Petronas Twin Towers in Oct 2024. With gearing at only 32%, we think further acquisitions would be a positive to drive its inorganic growth.
• Results in line. 4Q24 core profit of MYR196.2m (-5% QoQ, +21% YoY) was in line, at 98-97% of our and Street full-year forecasts. YoY earnings grew by 21% from a lower charge-out in minority interest earnings after the acquisition of the remaining stake in Suria KLCC, and higher revenue from the retail and hospitality segments. Average cost of debt fell to 4.01% (FY23: 4.55%) after it refinanced MYR1.05bn of sukuk during the year. The stapled security announced a dividend of 44.5 sen for the year (FY23: 40.5 sen).
• Stable as ever. Suria KLCC's higher occupancy rate (FY24: 99%, FY23: 96%), and single-digit rental reversions helped to record 7% higher revenue and 9% higher PBT in FY24. Despite increased competition from the opening of new malls in the city centre, Suria KLCC still recorded a 4% increase in footfall YoY, although moving annual turnover (MAT) tenant sales fell 7% off a high base in FY23. The group remains proactive in refreshing its offerings with the introduction of 28 new tenants, including five first-to market tenants to the mall. The office segment, backed by its long-term triple net lease, recorded a marginal 0.2% and 1.5% revenue and PBT growth YoY, but we expect higher growth for the segment following the positive rental reversion achieved for Petronas Twin Towers in Oct 2024.
• Recovery year for Mandarin Oriental (MO). MO's PBT for FY24 quadrupled to MYR12m (FY23: MYR3m) on the back of a 14% increase in revenue. While occupancy rates remained broadly stable (FY24: 56%, FY23: 58%), the revenue per available room (RevPar) grew by 21% to MYR610 in FY24 driven by robust growth in group stays and banqueting events. The group has revitalised some of the space in the hotel such as its meetings and recreational areas, and will continue to refurbish the hotel in FY25.
• Earnings revision. We lower our FY25F-26F earnings by 1.5% and 1% after adjusting our cost assumptions and introducing FY27F earnings of MYR900m, but we raise our TP after adjusting our longer-term rental reversion assumptions for the office and retail segments. Our TP includes a 4% ESG premium. Key upside/downside risks include changes in consumer sentiment, higher/lower rental reversions, as well as new acquisitions.

Source: RHB Research - 6 Feb 2025