亚太地区房地产行业-马来西亚房地产投资信托基金：风起云涌

www.jpmorganmarkets.comAsia Pacific Equity Research24 June 2022Malaysia REITsGathering cloudsMalaysiaConglomerates and PropertyMervin Song, CFA AC(65) 6882-7829mervin.song@jpmorgan.comBloomberg JPMA MSONG <GO>J.P. Morgan Securities Singapore Private LimitedTerence M Khi(65) 6882-1518terence.ml.khi@jpmchase.comJ.P. Morgan Securities Singapore Private LimitedCusson Leung, CFA(852) 2800-8526cusson.leung@jpmorgan.comJ.P. Morgan Securities (Asia Pacific) Limited/ J.P. Morgan Broking (Hong Kong) LimitedJeffrey Ng(60-3) 2718 0713Jeff.Ng@jpmorgan.comJPMorgan Securities (Malaysia) Sdn. Bhd. (18146-X)See page 17 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.We see clouds on the horizon, with 2H22 retail tenant sales growth likely to moderate as impact of higher cost of living, and uplift from EPF withdrawals and revenge spending dissipates. Further, while we expect recovery in the hotel sector, RevPAR upside is likely to be capped by a 10-11% increase in KL room supply this year. Overall, with concerns on slowing 2023 economic growth, we turn more defensive and downgrade Sunway REIT to N with lower PT of RM1.50 due to: 1) strong YTD performance (+7.8% versus KLCI Index -7.0%); 2) highest sensitivity to rising rates (5% DPU impact for 100bps change in floating rate debt); and (3) most of the recovery being priced in given yield spreads of 1.3% (0.2s.d. above mean). KLCC (OW, PT of RM7.10) is our top M-REIT pick,for its defensiveness arising from long office leases with Petronas.  Recovery on track. Retail tenants’ sales have recovered close to pre-COVID in 1Q22 with Sunway reporting that 2Q22 tenant sales werearound 117% of pre-pandemic levels. The retail landlords have benefited from ‘revenge’ spending post reopening and RM10,000 withdrawals from Employees’ Provident Fund (EPF - retirement accounts) by eligible Malaysians aged 55 and below with applications worth RM40.1bn. As a result, rental guidance has been revised from flattish/positive to marginal down to flat to positive. With Malaysia reopening borders to international guests from 1 April, this should provide a boost to malls,especially those with tourist exposure, such as Suria KLCC, and M-REIT-owned hotels, such as Sunway Pyramid Resort and Mandarin Oriental.  But clouds on the horizon, as there is a risk of retail spendingmoderating from 2H22 on the back of cost of living pressures, higher mortgage rates with our economists projecting the overnight policy rate (OPR) to rise from 1.75% earlier this year to 3% by 1Q23 and the impact of revenge spending and EPF withdrawals dissipating. Furthermore, the KL hotel sector faces the challenge