KUALA LUMPUR: Maybank IB Research has a "hold" call on KLCC Property (KLCCP) stock as the group's earnings are on track, with its financial year 2013 core pre-tax profit of RM875.2 million within expectations.
"Year-on-year growth was driven by most divisions, except for its Mandarin Oriental hotel business that was affected by lower food and beverages and occupancy rates.
"The trust declared a net distribution per unit of 8.2 sen (year-to-date at 27.7 sen) for the fourth quarter of 2013, which is in line with its expectations," says the research house.
It projects a decent financial year 2014 (FY14) pre-tax profit growth of seven per cent year-on-year, mainly supported by existing assets.
Currently, 80 per cent of KLCC Property's total debt comprises fixed-rate loans.
In the event of a 25 basis points hike in interest rates, the research house estimates a minimal downgrade of 0.2 per cent in its FY14 net profit forecast for KLCC Property.
"This year will see higher fuel bills, electricity tariffs and potential assessment fee hikes, while 2015 will see the implementation of the good and services tax and a potential hike in the overnight policy rate.
"Fortunately, the majority of KLCC Property's leases are based on a triple net lease (except for Mandarin Oriental, Suria KLCC and Kompleks Dayabumi).
"This requires the tenants to meet all outgoings, including property assessment and electricity charges, thus minimising the impact to KLCC Property's bottom line," it noted.