KIP Real Estate Investment Trust - Portfolio Expansion to Drive Earnings and DPU Growth
Mon, 27-Oct-2025 11:07 am
by Research Team • Apex Research

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KIPREIT (5280)

Target Price (RM)

0.950

Recommendation

Buy

  • We project KIPREIT’s 1QFY26 core earnings to come in within the range of RM16m–RM18m (+4.1% to +17.1% QoQ, +51.0% to 69.8% YoY), driven by partial recognition of its newly acquired assets.

  • We have raised our FY26F/FY27F/FY28F core net profit forecasts by 1.2%/2.9%/4.6% to RM70.6m/RM78.9m/RM85.9m, respectively incorporating contributions from Pasir Gudang and PKFZ industrial properties. 

  • Following the recent private placement, which increased total units to 958.6m, we expect a near-term DPU dilution of 4.3%, with accretion from FY27 onwards as earnings from new assets fully kick in.

  • We maintain our BUY rating with a lower TP of RM0.95 (from RM1.07), based on a 7% target distribution yield applied to FY26F DPU of 6.6 sen.

 

Results preview. We project KIPREIT’s 1QFY26 core earnings to come in at the range of RM16m-RM18m (+4.1% to +17.1% QoQ, +51.0% to +69.8% YoY), representing 22.7%–25.5% of our full-year forecast. The stronger performance is expected to be driven by the recognition of newly acquired retail and industrial assets, alongside steady occupancy and resilient rental income from its existing community malls.

 

Acquisition of new assets. We have updated our forecasts to incorporate the recent acquisitions of additional retail and industrial assets. While the retail assets were already included previously, we now factor in two industrial properties, Pasir Gudang (completed in Oct 2025) and PKFZ (expected completion in Feb 2026), which together are expected to contribute approximately 1.2% (or RM0.8m) to FY26F earnings, reflecting partial-year recognition before the full-year contribution if FY27 and FY28.

 

Completion of private placement. Recently, KIPREIT completed its private placement exercise to fund the acquisition of new retail and industrial assets. The proceeds have strengthened its capital base and will support future growth through asset enhancement initiatives (AEI) and portfolio expansion.

 

Outlook. The recent private placement enhances KIP REIT’s financial flexibility and supports future DPU growth. While earnings will increase with the addition of new industrial assets funded via the placement, the enlarged share base will lead to near-term DPU dilution, prompting a 11.2% reduction in our target price. The exercise lifts AUM to RM1.7bn (from RM1.5bn in FY25) and positions KIP REIT closer to its medium-term RM2.0bn target, strengthening its balance sheet and capacity for further yield-accretive acquisitions.

 

Earnings revision. After incorporating the earnings contributions from two industrial assets funded via private placement (one already completed and another pending injection), we have raised our FY26/27/FY28F core net profit forecasts by 1.2%/2.9%/4.6% to RM70.6m/RM78.9m/RM85.9m, respectively.

 

Valuation & Recommendation. We maintain our BUY recommendation with a lower TP of RM0.95 (from RM1.07), based on a 7% target distribution yield applied to FY26F DPU of 6.6 sen.

 

Risks. (i) Dilution risk from private placement, (ii) weaker consumer sentiment impacting retail performance, and (iii) governance risks involving key shareholders, and (iv) potential delays in asset completion or AEI execution.

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