KIP Real Estate Investment Trust - Within expectations
Thu, 22-Jan-2026 08:42 am
by Research Team • Apex Research

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KIPREIT (5280)

Target Price (RM)

0.950

Recommendation

Hold

  • KIPREIT’s 2QFY26 CNP came in at RM17.9m (+43.8% YoY, +0% QoQ), bringing 6MFY26 CNP to RM35.7m. The results were in line with our expectations, accounting for 50.6% of our full-year forecast and 51.1% of consensus estimates.

  • Declared a third income distribution of 1.70 sen (ex-date: 6 Feb 2026).

  • Outlook remains stable, supported by (i) earnings visibility from newly acquired retail and industrial assets, (ii) the ongoing SARA programme initiative, and (iii) the reopening of KIPMall Tampoi in Feb 2026, which is expected to deliver a 5–10% rental upside.

  • Downgrade to HOLD (from BUY) following the recent price rally, with an unchanged TP of RM0.95, based on a 7% target distribution yield applied to FY26F DPU of 6.6 sen.

 

Results within expectations. After accounting for changes in the fair value of investment properties (-RM0.4m) and other items (RM0.01m), 2QFY26 core net profit (CNP) came in at RM17.9m, (+43.8% YoY, +0% QoQ). The results were in line with expectations, representing 50.6% of our full-year estimate and 51.1% of consensus.

 

QoQ. Despite NPI rising 15.5% due to stronger performance from both existing and newly acquired assets, CNP remained stable at RM17.9m as the gains were largely offset by higher finance costs, as well as an increase in the manager’s management fee linked to the higher NPI.

 

YoY. 2QFY26 CNP rose 43.8% YoY to RM17.9m, supported by stronger retail and industrial performance. This was in line with NPI growth of 46% and 99.4%, respectively, driven by a 44.9% increase in revenue to RM43.5m, underpinned by higher occupancy, positive rental reversion, and contributions from mature assets such as DPulze Shopping Centre (acquired 2QFY25) as well as newly acquired properties including KIPMall Desa Coalfields, KIP Kuantan, Bintulu, and Pasir Gudang industrial properties (completed FY26).

 

Dividend. The Group declared a third income distribution of 1.70 sen (ex-date: 6 Feb 2026).

 

Outlook. KIPREIT’s earnings outlook remains stable, supported by contributions from newly acquired retail and industrial assets, estimated to add RM15.3m annually. The Group’s portfolio has expanded to 18 assets with total AUM of RM1.7bn, with management targeting RM2.0bn by 2027, reinforcing its growth trajectory. Footfall across the retail segment is expected to benefit from ongoing initiatives such as the SARA programme and upcoming festive seasons. Additionally, the reopening of KIPMall Tampoi in Feb 2026 is expected to contribute positively, supported by a refreshed tenant mix following selective non-renewals, as well as a 5–10% rental upside from higher carpark income and GTO-based tenancy structures. All identified assets have been injected, while further acquisitions are being explored under a RM220m allocation, based on current gearing of 39% and a cap of 45%.

 

Earnings Revision. No changes are made, as results were in line with our expectations.

 

Valuation & Recommendation. We downgrade KIPREIT to HOLD (from BUY) after the recent price rally, as valuation now appears fairly priced relative to its earnings outlook. Our TP remains unchanged at RM0.95, based on a 7% target yield on FY26F DPU of 6.6 sen. Fundamentally, KIPREIT continues to benefit from its unique asset profile and expansion initiatives.

 

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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