Narratives are currently in beta
28 November 2024
Catalysts
1. Hektar REIT (KLSE: 5121) portfolio of retail and education properties throughout Malaysia.
2. YTD Total revenue increased by 12.9% to RM94.8 million.
3. YTD Net Property Income increased by 8.6% to RM50.0 million, due to the recognition of income for Kolej Yayasan Saad.
4. Achieved a secure portfolio occupancy rate of 88.8% with positive rental reversion of 7.2%
5. Goal to double the portfolio by 2027.
6. Asset enhancement initiatives continue at Hektar Malls.
Industry Tailwinds
1. Malaysian economic expansion of 5.3% in the third quarter 2024.
2. The inclusion of an education asset strengthens the resilience; generating stable income.
Industry Headwinds
1. Overnight Policy Rate (OPR) directly affected finance costs.
2. Inflationary pressure directly contributes to spending trends.
3. Slow adoption of digital storefront usage.
Financial Metrics-Revenue, EPS
YTD Revenue: RM94.8 mm from RM65 mm
YTD EPS: RM 2.73 from RM 2.42
Assumptions
Where do you think revenue will be in 5 years time? and why?
Revenue in 5 years will be RM120 mm from the diversification and portfolio growth.
Where do you think earnings will be in 5 years time? and why?
Earnings in 5 years will be RM 50 mm conservatively for acquisition costs.
Risks
Various assets within the property portfolio are under improvement, meaning construction and general work in the customer areas. The possibility of a negative event exists.
The strength of the 3Q2024 results are positive and paints an upward trajectory for Hektar REIT.
Value in a REIT-Hektar REIT (KLSE: 5121)
Catalysts
1. Hektar REIT (KLSE: 5121) portfolio of retail and education properties throughout Malaysia, where retail-sales grew around 4.6% in 1H24.
2. Future portfolio diversification; successful acquisition of Kolej Yayasan Saad (KYS).
3. Goal to double the portfolio by 2027.
Industry Tailwinds
1. Malaysian strong economic recovery since the pandemic
2. Positive Malaysian economic policies for 2025
Industry Headwinds
1. Inflationary pressure directly contributes to spending trends
2. Slow adoption of digital storefront usage
Financial Metrics-Revenue, EPS
YTD Revenue: RM65 mm
YTD EPS: RM 2.42
Assumptions
Where do you think revenue will be in 5 years time? and why?
Revenue in 5 years will be RM120 mm from the diversification and portfolio growth.
Where do you think earnings will be in 5 years time? and why?
Earnings in 5 years will be RM 50 mm conservatively for acquisition costs.
Risks
Consideration of natural disasters or events that diminish consumers ability to access a location will affect business for Hektar REIT. Economic pressures such as inflation impact the entire country’s spending. Digital platforms offer marketing and sales opportunities which may not be feasible for brick-and-mortar stores. Acquisition deals involve areas of risk which are not always apparent; structural issues, infrastructure damage, hidden maintenance costs.
The leadership and management of Hektar REIT as experienced real-asset managers provides the stability to progress into the growth with careful due diligence and timely execution.
How well do narratives help inform your perspective?
