KLCCP earnings likely to beat market estimates

KLCC Property Holdings Bhd’s (KLCCP) full-year earnings for year ending March 31(FY08) is likely to beat market estimates on higher average rental rates at its flaghip mall Suria KLCC and an upward appraisal of its property worth.

At last Friday’s closing price of RM2.89, the stock is also trading at a huge discount to its assets value.

The stock had tumbled 20% over the past three months, prompting some analysts to say that the sharp decline was overdone.

Currently, KLCCP market value stands at RM2.7bil, which is half of its net book value of RM5.4bil as at end of March last year.

Citi Investment Research, in a recent update on the stock, said KLCCP should be valued at par to its assets worth given the prime locations of its commercial properties.

According to Citi, the revised net asset value (RNAV) estimate for Petronas’ commercial property and investment arm is RM6.1bil, or RM4.72 per share.

“We consider RNAV a better reflection of KLCCP’s valuation, as we expect property values and rental rates to increase 10% per annum in the KLCC area,” Citi said.

KLCCP had in February completed the revaluation of Petronas Twin Towers, Suria KLCC, Menara Exxonmobile and Menara Dayabumi, which resulted in a revaluation surplus of RM427mil.

The surplus was estimated to increase KLCCP’s net asset value by about 33 sen per share.

Meanwhile, KLCCP is scheduled to release its full year results by the end of next month.

Citi said the company’s full year earnings would probably exceed market expectation.

By The Star (by Izwan Idris)