Worst probably over for Sunway REIT as analysts see earnings recovery | EdgeProp.my

Worst probably over for Sunway REIT as analysts see earnings recovery | EdgeProp.my


KUALA LUMPUR (Aug 4): The worst is probably over for Sunway Real Estate Investment Trust (Sunway REIT), analysts said today, as they expect the property trust’s earnings to recover in the coming quarters after the group contended with the impact of the Covid-19-driven movement control order (MCO) in Malaysia to curb the outbreak.

Analysts from Hong Leong Investment Bank Bhd (HLIB) and MIDF Amanah Investment Bank Bhd said this today in their notes after Sunway REIT reported yesterday net property income fell to RM416.81 million in financial year ended June 30, 2020 (FY20) from RM439.7 million a year earlier, while group net profit fell to RM208.21 million from RM386.37 million.

Today, HLIB analyst Nazira Abdullah said that overall, Sunway REIT’s performance was affected by Covid-19 headwinds, coming from rental support granted to retail tenants during the MCO period and lease rebate given to hotel lessees.

“(But) we believe the worst is over for Sunway REIT and we expect a recovery in FY21, coupled with new contribution from newly acquired The Pinnacle Sunway. Management shared that during CMCO/RMCO, footfalls and tenants sales growth in their malls has shown some encouraging recovery signs, although their renewal has been hampered with negative double digit rental reversion,” Nazira said.