Kenanga Research downgraded Malaysia's real estateinvestment trusts (REITs) to 'neutral' from 'overweight' as itbelieves there is limited room for further yield compressions.
"As investors seek safe havens in defensive stocks thisyear, we note that most Malaysia's REITs are trading athistorically low gross yields, not to mention record low spreadsto the 10-year Malaysian Government Securities (MGS) yields,"the research house said in a note on Tuesday.
Assuming the 10-year MGS yields trend lower to 3.3 percentbased on historical trends in 2013, and Malaysia's REITscontinue to demand current record low spreads, the brokeragesaid it had increased the target prices on Malaysia's REITsunder its coverage.
"However, our new target prices only provide less than 10percent total returns, implying limited share price upsides."
Kenanga downgraded Capitalmalls Malaysia Trust to'market perform' from 'outperform', though it raised the targetprice to 1.80 ringgit per share from 1.69.
It maintained 'market perform' on Sunway REIT , butraised the target price to 1.51 ringgit from 1.42. It alsomaintained 'market perform' on Axis REIT, with a higher targetprice of 3.08 ringgit.
"We prefer KLCC Property (outperform rating;target price of 6.87 ringgit) as an alternative to Malaysia'sREITs as our target price reflects a REIT payout structure and atarget 2013 gross dividend yield of 4.6 percent," it added.
0139 GMT
(Reporting by Yantoultra Ngui in Kuala Lumpur;yantoultra.ngui@thomsonreuters.com; Editing by PrateekChatterjee)
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09:11 MALAYSIA STOCKS NEWS-Latexx shares surge after buyoutoffer from Austrian firm
Shares in Malaysian rubber glove maker Latexx Partners
surged 27.4 percent on Tuesday after Austrian firmSemperit AG Holdings made a 603 million ringgit($196.58 million)takeover offer in cash.
The offer announced by the Austrian medical gloves maker onMonday is the third such deal for Latexx. It involves Semperitproposing to pay 2.30 ringgit per Latexx share and 1.77 ringgitper warrant.
Last year, the Malaysian firm received a 852 million ringgitbuyout proposal from private equity firm Navis and another offerfrom Malaysian rival YTY Industry Holdings to merge some of itsunits in a deal valued at 1.37 billion ringgit.
0110 gmt
(Reporting by Niluksi Koswanage in Kuala Lumpur;niki.koswanage@thomsonreuters.com;)
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Keywords: MARKETS STOCKSNEWS MALAYSIA/REITS