News Update
- Axis REIT announced yesterday that a public tender for the proposed disposal of its Kayangan Depot will be advertised in selected newspapers next week.
- The property was acquired in Jun 2006 for RM16.1m. Assuming a 2% upside on the property’s current book value of RM22.1m (latest revaluation as at Dec 2011) the total capital gain will be approximately 38% from the acquisition cost. Also, as the property has been held for more than five years, Axis will not be subjected to any RPGT on the gain on disposal.
- We believe that the disposal could have a positive impact on FY12 DPU. Assuming that 30% of the proceeds is distributed back to unitholders (and the remaining 70% is retained for future asset acquisitions), this could bump up Axis REIT’s FY12 DPU to an all-time high of 19 sen.
- We expect the disposal to be completed in 4Q12. Our FY12 net earnings forecast is reduced by 1%, while our FY13-14 estimates are reduced by 2% p.a. after we factor in the loss in income from the property. Our DDM-based fair value is revised slightly to RM2.76 (from RM2.80) in line with our DPU revision. Maintain Market Perform.
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