RHB Investment Bank Bhd (RHB Research), MIDF Investment Bank Bhd (MIDF Research) and Hong Leong Investment Bank Bhd (HLIB) have all maintained their NEUTRAL or HOLD calls on KLCCP Stapled Group following the release of its first quarter results for FY2025, with target prices ranging from RM7.71 to RM8.52, citing limited upside despite stable earnings.

KLCCP Stapled Group reported a core net profit of RM201.5 million in 1QFY25, marking a 7.2% year-on-year and 2.7% quarter-on-quarter increase. All three research houses noted the results were within expectations, with earnings accounting for around 24% of full-year forecasts. The group also declared a distribution per stapled security (DPS) of 9.2 sen, up from 9.0 sen a year earlier.

According to RHB Research, the positive rental reversions in the retail segment supported earnings during the quarter, while lower minority interest charges—following the acquisition of the remaining 40% stake in Suria KLCC in April—further bolstered bottom-line growth. It noted that KLCCP’s gearing remains healthy at 32%, and with 91% of its borrowings on fixed rates, the average cost of debt had declined to 4%. The investment bank also expects future acquisitions to play a role in driving inorganic growth.

MIDF Research echoed the sentiment, highlighting that stronger retail contributions during the festive period had offset weaker numbers from the hotel and management services segments. It noted that hotel performance was affected by lower occupancy during Ramadan and ongoing ballroom upgrading works at Mandarin Oriental Kuala Lumpur, though earnings from this segment are anticipated to recover in the coming quarters. The brokerage added that the office segment should continue to deliver stable income under long-term lease agreements, and maintained its target price of RM8.40 with estimated yields at 4.9%.

HLIB similarly maintained a hold rating with an unchanged target price of RM7.71. It said although the hotel and management services segments dragged topline revenue—which fell 11.4% quarter-on-quarter—core profit rose due to a sharper 24.1% drop in operating expenses. HLIB pointed out that the group’s outlook should improve as tourism gains momentum ahead of Visit Malaysia 2026, particularly with a 15.8% rise in total tourist arrivals and a 33.9% surge in Chinese visitors in the first two months of 2025. The full-year contribution from Suria KLCC’s additional stake is also expected to lift earnings, although this will be partially offset by increased finance costs.

Retail occupancy remained at 99%, while office space continued to operate at full capacity. Hotel occupancy, however, dipped to 54% from 58% previously, reflecting the temporary closure of facilities during the renovation period.

Looking forward, analysts expect the group to benefit from mid-single digit rental reversions in the retail segment and a 3% increase in office rentals, while hotel performance is projected to rebound with the reopening of its upgraded facilities. Nevertheless, all research houses agree that current valuations leave little room for near-term re-rating.

Source: KLCCP Stapled Offers Limited Upside Despite Stable Earnings