Date: October 2, 2024
Broker: Maybank Investment Bank Berhad

Overview
IGB REIT (IGBREIT MK) is a major retail-focused REIT in Malaysia, owning prime shopping malls like Mid Valley Megamall and The Gardens Mall. The REIT benefits from strong retail demand, with high occupancy rates and robust foot traffic supporting its earnings growth.

Stock Performance and Target Price

• Current Price (CP): MYR2.11
• Target Price (TP): MYR2.15
• Upside: 7%
• Market Capitalization: USD1,797 million
  IGB REIT is rated as a BUY, with an anticipated price upside of 7%, reflecting confidence in its ability to continue delivering solid returns supported by stable rental income from its prime retail assets.

Earnings Forecast and Dividend Yields

• 2024 Core Earnings Growth: 21.3%
• 2025 Core Earnings Growth: 20.8%
• 2024 Dividend Yield: 4.7%
• 2025 Dividend Yield: 4.8%

IGB REIT’s earnings growth is projected to remain strong in 2024 and 2025, driven by resilient retail performance and sustained high occupancy rates. The REIT offers attractive dividend yields, making it appealing for income-focused investors.

Occupancy Rates of Key Properties
IGB REIT’s key assets continue to show exceptional performance in terms of occupancy:

• Mid Valley Megamall: 100%
• The Gardens Mall: 100%

Both malls are located in prime areas, with consistently high occupancy rates that have remained at full capacity, even post-pandemic. This highlights the resilience of IGB REIT’s assets and their ability to attract and retain tenants.

Retail Segment Outlook
The retail sector in which IGB REIT operates continues to be robust, particularly for prime locations. The occupancy rates of shopping malls in key states like Kuala Lumpur and Selangor have improved, with IGB REIT’s flagship assets benefitting from strong consumer demand. National retail sales are projected to grow by 4% in 2024, further supporting the positive outlook for IGB REIT’s performance.

Debt Profile and Financing Costs

• Total Debt: MYR1.215 billion
• Floating Rate Debt: 0%
• Gross Gearing: 22%

IGB REIT’s conservative debt management is evident in its zero exposure to floating rate loans, which shields it from interest rate volatility. Its gross gearing of 22% further indicates prudent financial management.

Investment Thesis
IGB REIT is a strong contender in the retail REIT space, with premier assets that maintain full occupancy and are well-positioned to capitalize on growing retail demand. Its steady earnings growth, attractive dividend yields, and minimal exposure to interest rate risks make it a compelling choice for investors seeking stable returns.

This analysis summarizes IGB REIT’s position and performance as of October 2, 2024.