Sunway REIT has recalibrated its strategic roadmap, TRANSCEND 2027, with a renewed focus on its core strengths in the retail sector. The revised strategy involves a shift away from its previous target of balancing its portfolio with a significant portion in services, industrial, and foreign properties. Instead, Sunway REIT will now seek strategic opportunities across different sectors without imposing specific targets. This adjustment aims to enhance the REIT's ability to secure yield-accretive acquisitions through both organic and inorganic means.
In light of these changes, RHB Stock Broking House has maintained a BUY call on Sunway REIT, with a new target price of RM1.92, reflecting a 16% upside potential and an estimated yield of around 7% for FY25F. Analysts highlight that the REIT's recalibrated strategy positions it well for future growth by allowing more flexibility in acquiring yield-enhancing assets.
Sunway REIT's emphasis on expanding its presence in Malaysia's retail sector remains intact. The REIT plans to invest in various categories within retail, including "regional malls" and "neighbourhood malls." Regional malls, such as the Sunway Carnival Mall in Penang, cater to populations within a 50km radius and offer large net lettable areas. The upcoming Sunway City Ipoh Mall, slated to open in mid-2027, exemplifies this strategy and is expected to contribute significantly to the REIT's growth.
Additionally, the company will continue to focus on neighbourhood malls, which serve local communities with their food and beverage and service offerings. Recent acquisitions, including 163 Mall and Kluang Mall, boast high occupancy rates and strong net property income yields. The REIT anticipates these properties will generate mid-single digit rental reversions.
The strategic shift and portfolio adjustments come amid evolving market dynamics, including compressed yields for industrial properties. The recalibration of TRANSCEND 2027 is expected to provide the company with greater flexibility and opportunities for growth, positioning it favourably in the current market environment. The new strategy and acquisitions align with Sunway REIT's goal to enhance its asset base and yield, thus supporting its long-term objectives.
Source: RHB
Title: Recalibrating TRANSCEND 2027; Maintain BUY
