KUALA LUMPUR: Hong Leong Investment Bank (HLIB Research) said AME Real Estate Investment Trust's (AME REIT) net profit of RM9.2 million for the third quarter ended Dec 31, 2023 (Q3FY24), which increased its nine-month's total to RM26.5 million, was within expectations at 78 per cent of its full-year forecast. 

The research firm said that the completion of Plot 16's purchase in Indahpura on Oct 16, 2023, further supported AME REIT's performance.

  "With management confident of fully renewing or replacing the remaining three tenancies up for renewal in financial year 2024 (FY24), as well as an average rental reversion of about six per cent, AME REIT should be able to end FY24 well.

  "Looking ahead to FY25, with only two leases up for renewal, the downside risk of non-renewal of tenancy is minimal, with occupancy rates likely remaining at 100 per cent," it said in a note. 

  The company's portfolio consists of 34 industrial properties and three industrial-related dormitories.

  HLIB Research said that the overall occupancy rate remained robust at 100 per cent, while its gearing level increased to 15.2 per cent. 

  It maintained a "buy" on the stock with a higher target price of RM1.41 from RM1.34 previously as it increased its distribution payout ratio assumption for FY25 to 100 per cent, from 95 per cent previously.

  "Besides its ample gearing headroom allowing for additional acquisitions, we deem AME REIT to be a compelling case, given its backing of a strong sponsor with an established track record and brand name, as well as the sponsor and management's complete suite of capabilities in the supply chain of industrial properties," it added.