Bursa Malaysia Stock Price Target: PAVREIT

KUALA LUMPUR: Maybank Kim Eng Research has raised the financial year 2012-2014 earnings forecast of Pavilion Real Estate
Investment Trust (Pavilion REIT)by eight to 8.4 per cent.

It also factored in a higher rental growth and turnover rent as well as higher occupancy rate.

Maybank Kim Eng in a research note today said Pavilion REIT's first half net profit of RM95.6 million was above the research house and consensus expectations at 55 to 56 per cent.

"This was due mainly to higher-than-expected retail turnover rent and rental hikes," it said.

Going forward, it said piling works of the Pavilion KL Mall extension will commence in the third quarter, whilst construction of the sub-urban mall in Subang Jaya is ahead of schedule.

"As for the Fahrenheit 88 mall, the management is monitoring the leases due for renewal in the third quarter, rental reversions and tenancy profile.

"When acquired, we expect these properties to raise Pavilion REIT's asset size by more than 41 per cent from RM3.6 billion currently," it added.

Maybank Kim Eng has maintained a "hold" call on Pavilion REIT but revised upward the target price to RM1.40 from RM1.26 previously. -- BERNAMA

April 20, 2012

Pavilion Reit - Exceptional FY13F, with upcoming Fashion Avenue and tenancy renewal BUY

Stock Name: PAVREIT
Company Name: PAVILION REAL ESTATE INV TRUST

Research House: AMMB

Price Call: BUY

Target Price: 1.33

- We upgrade our rating on Pavilion REIT (PavREIT) from aHOLD to a BUY and raise our fair value to RM1.33/unit (vs. RM1.15/unit previously)based on a 5% discount to our DCF value of RM1.40/unit.

- Following a meeting with the management, we raise our earningsestimates for FY12F and FY13F by 1% and 2%, respectively, translating into amarginally higher DPU of 6.2 sen and 7.3 sen, underpinned by organic growth andacquisition. We assume a 99% payout ratio.

- The Fashion Avenue (NLA: 68,000sf) is targeted to beopened by early September 2012. So far, there is a circa 90% of precommitted tenants. The full impact ofthe Fashion Avenue and an estimated average rental rate of RM16psf, comparedwith under-RM10psf previously, would be seen in FY13F.

- Additionally, at least 67% of tenants are due for renewalin FY13F. We expect a 12%-15% rental reversion because tenants are committed toa 3-year tenancy during the infant stage of the mall. In our model, we forecasta higher weighted average rental rate of RM19psf for FY13F, vs. RM17psf forFY12F.

- In order for Pavilion Mall to sustain its attractiveness,circa 5% of the tenants are changed on a yearly basis to provide a fresher appealand a newer look to the mall. Tenants are also required to refurbish theirspace every 6 years.

- Elsewhere, management expects Farenheit 88 to stabiliseits tenancy within 3 years by FY13F. PavREIT would acquire the mall if theowner decides to sell. As such, this may be PavREIT's first asset injectionthat could take place by FY14, given that the mall is deemed fit.

- Pavilion extension (NLA:250,000sf, GFA:4,000sf), whichconsists of up to 8 levels, will beadjoining the existing mall at levels 1, 2 and 3. Additionally, the mall'sappeal would be enhanced by a proposed glass-covered structure running from LaBodega towards the fountain. The extension is currently in the soil testingstage. Construction is to begin in 3QFY12. Management intends to acquire theextension immediately upon completion in FY16.

- As Pavilion mall took a year to stabilise the tenancy, theextension is expected to take 6 months, given the maturity of the mall.Management expects full tenancy for the extension, underpinned by a longwaiting list of over 400 applicants.

- Management targets a distribution growth of 5%organically. However, FY13F will be an exceptional year, and as such, we are shiftingour valuation basis to FY13F. Given this, PavREIT is attractive and we expectmore news flow to excite the market. At current level, PavREIT has a dividendyield of 5.4% and 6.4% (vs CMMT: 5.6% and 5.9%) for FY12F and FY13F,respectively, and DPU growth of 18% in FY13F; hence, our BUY rating.

Source: AmeSecurities

February 9, 2012

Pavilion REIT: Maintain Hold - Strong showing for 2011

Stock Name: PAVREIT
Company Name: PAVILION REAL ESTATE INV TRUST

Research House: MAYBANK

Price Call: HOLD

Target Price: 1.10

A good set of results. PavREIT's RM12.4m core net profit over 7-31 Dec 2011 (listed on 8 Dec 2011) was 13% above our and its own IPO forecasts. Management is confident of beating its own RM167m 2012 net profit forecast, especially with the reconfiguration of the existing TANGS space into a high street fashion precinct, thereby attracting higher rentals psf. We tweak our 2012-13 net profit forecasts by +1% but maintain our RM1.10 DCF-based TP. We maintain our Hold recommendation, as total return is less than 15%.

Maybank Research 9 Feb 2012

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January 20, 2012

Pavilion REIT (Hold): Asset enhancement for the longer term

Stock Name: PAVREIT
Company Name: PAVILION REAL ESTATE INV TRUST

Research House: MAYBANK

Price Call: HOLD

Target Price: 1.10

Positive asset enhancement. We are positive on Pavilion REIT's (PREIT) latest asset enhancement initiatives in transforming the existing TANGS Fashion Lifestyle Store area (68,000 sqft NLA or 5% of Pavilion Mall's total NLA) into a new high street fashion precinct, which will enhance the rental yield. Significant contributions should come in from 2013 onwards. No change in our earnings forecasts for now. Our DCF-based TP is unchanged at RM1.10. Hold.

Maybank research (20 January 2012)

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January 19, 2012

Pavilion REIT (Hold): A Malaysia retail icon

Stock Name: PAVREIT
Company Name: PAVILION REAL ESTATE INV TRUST

Research House: MAYBANK

Price Call: HOLD

Target Price: 1.10

A class of its own. Pavilion REIT's (PavREIT) key attraction lies in its asset portfolio and the jewel in its crown, Pavilion Kuala Lumpur (KL) Mall. Strategically located in the heart of Kuala Lumpur's prime tourist and shopping district, this mall caters predominantly to the upper middle to high income group, and is one of only 4 prime retail malls in the country. We initiate coverage on PavREIT with a Hold rating and RM1.10 DCF-based target price. It currently trades at a 5.5% yield.

Maybank research (19 January 2012)

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