KUALA LUMPUR: CIMB Securities has initiated its coverage on KIP Real Estate Investment Trust (Reit) with a “Buy” call anchored on resilient earnings offers from the company.
The firm said KIP Reit’s niche focus on underserved secondary cities, stable rental income, and prudent capital management position it well to deliver sustainable long-term returns.
“KIP Reit offers resilient earnings, anchored by its niche focus on community-centric retail malls in underserved secondary towns across Peninsular Malaysia. Its defensive portfolio is supported by stable occupancy rates and consistent rental reversions, while growing interest from institutional investors adds further appeal.
“We project a strong 13 per cent core net profit compound annual growth rate over three years from 2025, driven by asset acquisitions, resilient occupancy, and sustained rental growth.” it said in a note.
The firm gave a target price of 95 sen on KIP Reit, reflecting a total return potential of 20 per cent.
“Our target price is based on a 25 per cent discount to its DDM valuation. This is to reflect KIP Reit’s low trading liquidity and market capitalisation.”
KIP Reit’s portfolio includes the KIPMall brand which primarily serves middle-income households by providing essential goods and services in mass-market catchments.
At listing in 2017, the Reit owned six retail properties valued at RM580 million.
As at the end of August, it has expanded to 11 retail and six industrial assets with a total asset value of RM1.6 billion.
CIMB Research said the Reit’s focus on secondary city retail sees limited competition which underpins stable occupancy rates.
“The relatively lower asset valuations in these locations also enable KIP Reit to deliver higher asset yields of 10 per cent per cent on average, compared with the 8.9 per cent average for peers in more saturated urban markets as of 2024,” it added.
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