Pavilion Reit: Strong Performance Propels Positive Outlook

Pavilion Real Estate Investment Trust (PREIT) surpassed expectations with its 1Q24 results, driven by robust earnings from new assets and Pavilion KL Mall. Core net profit reached MYR83.2m, marking a 19% YoY increase.

The acquisition of Pavilion Bukit Jalil (PBJ) contributed significantly, while the KL Mall continued to perform well.

Analysts predict continued resilience in PREIT’s earnings, fueled by prime locations like Pavilion KL and growth prospects from PBJ.

Forecasts for FY24/25/26E earnings have been revised upwards by +4%/+13%/+13% respectively, reflecting optimism in the trust’s future prospects.

Pavilion Reit

“We expect PREIT’s earnings to remain resilient, largely backed by the KL mall, due to its prime location, and with additional growth contribution from PBJ. However, we also remain cautious about Da Men Mall which could continue to face stiff competition from surrounding malls.

“Raising estimates We raise FY24/25/26E earnings forecasts by +4%/+13%/+13% respectively, after 1) nudging up our rental income assumptions for the KL Mall and PBJ, and 2) lowering our finance cost assumptions.

“We expect PBJ to achieve a targeted annual NPI of MYR146m by Jun 2025 (6M23: MYR52.5m). We expect earnings expansion from PBJ to be driven by rental reversion, with 59% of its leased space due for rental renewal in 2024,” say analysts from Maybank.

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