PETALING JAYA: KLCCP Stapled Group (KLCCP) which recently reported financial results that were within analyst expectations has seen its positive points already priced into the company stock.
MIDF Research said while it sees the earnings outlook for KLCCP remaining positive due to improving contributions from the retail and hotel divisions, “we think that the positives have been largely priced in.”
“Hence, we maintain our ‘neutral’ call on KLCCP,” it said.
It noted that KLCCP’s third quarter ended Sept 30 (3Q22) core net earnings climbed to RM176.6mil.
This is as earnings were driven by the group’s retail and hotel divisions while profit before tax of its retail division was higher due to higher tenant sales and lower rental assistance.
“On the other hand, its hotel division saw narrower loss before tax following improved occupancy rates at Mandarin Oriental.
“Cumulatively, the first nine month of financial year 2022 core net income improved to RM503.2mil (plus18.3%), thanks to earnings recovery of its retail division (plus 83%) and narrower losses from its hotel division,” said MIDF Research.
The research house also said it was maintaining its earnings forecast for KLCCP’s FY22 and FY23.,
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“We see positive earnings outlook for KLCCP as the rental reversion outlook for Suria KLCC is expected to improve due to higher shopper footfall and higher tourist arrival.
“We also see stronger earnings in 4Q22 due to the year-end holiday season. We estimate the hotel division to turn around in FY23 amid anticipation of higher tourist arrivals.”
For the quarter under review, the group posted a net profit of RM176.59mil, a 30.43% increase from the previous corresponding quarter.
Earnings per share increasee to 9.78 sen from 7.5 sen in the comparative quarter.
The group saw a revenue of RM373.98mil, a 43.65% improvement year-on-year.
A third interim income distribution of eight sen per stapled security was declared to shareholders, bringing the total to 24 sen for the first nine months of the current financial year.
In annoucing its results for the third quarter, KLCC Property Holdings Bhd CEO Md Shah Mahmood said there were improvements in both the group’s retail and hotel operations following the easing of travel restrictions and the return of international travellers to Malaysia since Aug 1.
“The encouraging performance, particularly from the retail and hotel segments gives the group the confidence that we are on track towards recovery,” he said.
He added that the office segment is expected to remain stable with full occupancy and long-term leases, which will help maintain stable cash flow.
Md Shah also acknowledged that the recovery may be encumbered by increasing business and labour costs, rising interest rates and the uncertainty surrounding Covid-19 cases.,