September 14, 2012 / 1:56 AM / 5 years ago

STOCKS NEWS MALAYSIA-Affin starts IGB REIT with 1.43 rgt fair value

Affin Investment Bank initiated coverage on IGB Real Estate Investment Trust (REIT), which is set to be Malaysia’s largest REIT by retail asset value and market capitalization, with a target price of 1.43 ringgit and an ‘add’ recommendation.

Affin also named IGB as its top pick for the sector

The target price is a 14 percent premium to the company’s offer price of 1.25 ringgit. It is due to list next Friday, boasting two prominent retail malls worth a total of 4.6 billion ringgit ($1.49 billion) as assets.

Affin said the two assets have enjoyed a high occupancy rate and projects an annual rental growth of 6 to 7 percent for the next two years, buoyed by strong tourist arrivals and a positive outlook for the retail market.

The research house added that IGB’s gearing rate of 26 percent is below the statutory ceiling of 50 percent and below the sector average of 30 percent. “IGB may leverage up by a further 1.1 billion ringgit for immediate yield accretive acquisitions,” said Affin. 0939 AM (0139GMT) (Reporting by Al-Zaquan Amer Hamzah;


0937 STOCKS NEWS MALAYSIA-Kenanga starts Gas Malaysia with outperform

Kenanga Investment Bank started coverage on Gas Malaysia Bhd with an ‘outperform’, saying the company is a “growing cash cow” thanks to future earnings growth and generous dividend payout.

Kenanga set a target price of 2.94 ringgit on Gas Malaysia shares. The stock rose 0.4 percent to 2.62 ringgit on Friday.

Kenanga said an expected fall in Gas Malaysia’s earning in FY 2012 is expected to be limited as the firm has signed additional gas supply deal with state oil firm Petronas , potentially boosting 2013-15 earnings.

Gas Malaysia is the only firm licensed to supply and sell natural gas in mainland Malaysia where demand has been steadily growing.

“The company has committed to a 100 percent payout of its FY12 earnings and 75 percent for each year for FY13-FY14,” Kenanga said in a note to clients.

“We see little problem for Gas Malaysia not to pay such a generous dividend given its relatively low capex requirement and sustainable earnings quality.”

Reporting by Niluksi Koswanage in Kuala Lumpur; $1 = 3.0805 Malaysian ringgits

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