STOCK FOCUS OF THE DAY
Pavilion REIT: Resilient shopping malls HOLD
We maintain our HOLD recommendation on Pavilion REIT (PREIT) with a higher fair value of RM1.60 from RM1.53 based on an unchanged forward target yield of 5.5%. The upward FV revision is derived from a higher payout ratio of 100% vs. 95% previously. We have revised our earnings forecast downwards by 1.4% and 0.3% for FY18F-19F with minor tweaks in operating expenses.
Shopping malls located in KL city centre remained resilient with Pavilion Kuala Lumpur and Intermark Mall having occupancy rates at 98.9% and 90.0% respectively. Meanwhile we expect low single-digit rental growth, both with leases expiring in FY18 at a marginal 14% and 20% respectively.
RETAIL RESEARCH
Stocks On Radar: Pentamaster, Serba Dinamik, Kronologi Asia, Silver Ridge
ECONOMIC HIGHLIGHT
Malaysia: Will prices go up post SST?
NEWS HIGHLIGHTS
SST: Guan Eng: Sales tax to have 5% and 10% categories
MyEG: Says still negotiating business expansion plans
REIT Sector: M-REITs volatility to continue
Poh Huat: To buy warehouse-cum-office showroom in Australia
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