Pavilion REIT maintains a BUY rating with an unchanged target price of RM1.69, driven by a positive near-term outlook following a management meeting. Pavilion KL Mall, contributing 70% to FY24 net property income, remains the key earnings driver with stable growth from mid-single-digit rental reversion, fueled by high footfall and tourist arrivals. Pavilion Bukit Jalil, acquired in June 2023, shows rental growth from RM9.50psf to RM10psf, though rising costs may delay its NPI target of RM146m, with a RM400m balance payment due by May 2025. Da Men Mall, previously loss-making, is set to breakeven by 4QFY25 under a new master lease with Easyhome International. The REIT offers an attractive 5.4% distribution yield.
MIDF on Pavilion REIT
“Post meeting, we make no changes to our earnings forecast for FY25/26/27F. Our TP for Pavilion REIT is unchanged at RM1.69, based on Dividend Discount Model. We remain sanguine on earnings outlook for Pavilion REIT which will be driven by positive rental reversion of Pavilion KL Mall and earnings from Pavilion Bukit Jalil,” says MIDF.
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