DBS Group Research analysts Dale Lai and Derek Tan have maintained their “buy” recommendation with an unchanged target price of $1.40 for AIMS APAC REIT (AA REIT) despite the REIT’s 1Q21 earnings coming in slightly below their forecasts.
For 1Q21, AA REIT posted a 20% decline in distribution per unit (DPU) to 2 cents for 1Q21 ended June, and a 10.9% fall in gross revenue on Thursday (July 23) due to rental waivers, lower contributions, and the expiry of the master lease at 451 Yishun Industrial Park A.
See: AIMS APAC REIT posts 20% y-o-y decline in 1Q21 DPU to 2.00 cents
Lai and Tan say they have cut their forecast to assume no income contributions from the property for six months.
The analysts have also adjusted their FY21F DPU forecast to 9.09 cents.
However, Lai and Tan believe the strong increase in occupancy of 4.2% quarter-on-quarter will help the REIT mitigate the impact over the rest of FY21.
“Based on our estimates, approximately $2.0m of retained income from the previous quarter has been utilised in 1Q21 to maintain a stable DPU of 2.00 cents. We have also assumed that the provisions made this quarter will be more than sufficient, and the remaining retained income of more than $1.0m will be gradually distributed in FY21,” they say.
Units in AA REIT closed 1 cent lower, or 0.8% down, at $1.22 on Friday.
