KLCCP Stapled Group (KLCCP) has demonstrated a resilient performance in the first half of the financial year 2024 (1HFY24), with a core net profit of RM379.1 million, reflecting a 5% year-on-year increase. The results align with market expectations, as the earnings accounted for 46% of the company's full-year estimates and 37% of consensus forecasts. Analysts have issued various ratings, maintaining calls such as HOLD and MARKET PERFORM, with price targets set at RM7.50 and RM8.00, respectively.
The group declared a second interim gross distribution per unit (DPU) of 9.2 sen for the second quarter of FY24, bringing the total DPU for the first half to 18.2 sen. This marks a slight increase from the 17.3 sen declared in the same period last year. The revenue for 1HFY24 increased by 6%, primarily driven by the performance of Suria KLCC and improved occupancy at the Mandarin Oriental hotel, which reported a significant recovery following a challenging previous year.
In the second quarter of FY24, KLCCP recorded a net profit of RM191.1 million, representing a 6% increase compared to the previous year. This growth was bolstered by the office segment's stability, underpinned by long-term leases and a Triple Net Lease (TNL) arrangement, alongside higher occupancy rates at Suria KLCC, which improved to 98% from 96% a year earlier. Notably, the retail segment's revenue also rose by 8%, contributing RM138.8 million, and reflected a 3% increase in tenant sales.
Despite the encouraging performance, the company's bottom line was partially impacted by a 64% year-on-year increase in finance costs, primarily due to higher borrowings for the acquisition of a 40% equity interest in Suria KLCC completed in April 2024. The average cost of debt decreased to 4.16% in 2Q24, down from 4.55% in FY23.
Looking ahead, KLCCP's management is optimistic about the future, expecting stable earnings growth supported by the steady performance of its prime office properties and improved conditions in its retail and hotel sectors. The group is also exploring new acquisition opportunities to enhance its portfolio further.