StarhillGbl Reit FY2017/2018 Results

Starhill Global Reit Released it's latest 4th Quarter and Full Year Results ending FY2017/2018. DPU Q-on-Q remain flat. Full year DPU at 4.55cents versus my earlier estimate of 4.56cents.

Positve

- Office at 95% occupancy rate, up from 91% in 3rd Quarter.

- AEI at Plaza Arcade is completed. From my estimate, it should provide a increase of 0.17cents of DPU for FY2018/2019. UNIQLO to open its store in 3rd Quarter 2018.

- DPU drop may have bottomed as Q-on-Q is flat. The drop in Y-on-Y should not be as drastic for next FY. AEI upside of 0.17cents should provide some support.

Negative

- DPU performance remains challenging.

Conclusion

DPU may have bottom as the higher withholding tax in Malaysia has been priced into the DPU. Going forward in comparison Y-on-Y between FY2017/2018 and FY2018/2019, if any fall in DPU should no be as drastic. Estimated 0.17cents upside from AEI of Plaza Arcade could provide some support. 

Below are some estimates of 3 possible rate of decline of 5%, 2.5% and 1%. Judging from the table above, I would look at 5% as the max possible decline as a MOS, to have 7% yield, TP of 0.64.