RHB Research maintains "Neutral" call on KLCC staple group

RHB Research maintains "Neutral" call on KLCC staple group
Business & Markets 2013
Written by Bernama
Thursday, 22 August 2013 12:48

KUALA LUMPUR (Aug 22): RHB Research has maintained a "neutral" call on KLCC Stapled Group (KLCCSG), which comprises KLCC Property Holdings and the newly-formed KLCC REIT, as its first half results for this year was in line with expectations.

In a statement today it said group profit in the first half surged by 52.3 per cent year-on-year, due to cost savings from lower minority interest and tax expenses, after completion of its stapling exercise on May 9 this year.

"We raised our financial year 13-14 forecast by 4-11 per cent as we had underestimated the cost savings earlier. We also lifted our fair value to RM6.90 from RM6.84, given the slightly higher dividend per share forecast," said RHB Research.

The research house added that it believed KLCCSG's valuation remained rich despite the market's recent correction, as it was largely priced in all positive news from the stapling exercise.

Meanwhile, Kenanga Research maintained a "Market Perform" on the group, citing the 1H13 core earnings of RM283 million as generally within expectation, which is 47 per cent of Kenanga's estimates, although at only 42 per cent of the core earnings forecast of the group prospectus.

"We regard this as in line with the prospectus assumption that the Staple REIT structure will be effective on Jan 1 this year, but actually started later on April 2," said Kenanga Research.

However, the research house lowered its target price to RM6.12 from RM6.48, as it increased the FY14 estimated target dividend yield to 5.1 per cent from 4.7 per cent previously