MARKET PLAYERS rallied behind MREIT, Inc. last week on the back of optimistic first-quarter earnings report thanks to last year’s acquisitions.
A total of 111.84 million MREIT shares worth P1.96 billion were traded from May 2 and 4 to 6, data from the Philippine Stock Exchange showed. When compared, MREIT would be the most actively traded stock last week.
Financial markets were closed on Tuesday in observance of the Eid’l Fitr holiday.
The real estate investment trust (REIT) arm of Megaworld Corp. closed at P17.66 per share, inching up by 0.9% from April 29’s closing price of P17.50 apiece. Since the first trading day of the year, the stock’s price has gone down by 8.6%.
“MREIT’s movement [last] week has been driven primarily by a P687.2 million reported net income in the [first quarter] of 2022, due in part to its portfolio expansion efforts as it scooped up properties by the end of last year,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
“However, the prospect of rising interest rates, plus the ongoing economic headwinds caused by high commodity prices, could erode demand for REITs and chip away at the organic growth prospects of commercial REITs like MREIT,” he said.
AAA Southeast Equities, Inc. Research Head Christopher John Mangun noted MREIT was one of two listed REITS that outperformed in the market last week.
“MREIT is currently trading at a 20% discount to its price back at the beginning of the year. Perhaps investors are wary that a tightening of restrictions may be implemented after the election,” he said in a Viber message.
For the January-to-March period, MREIT generated P901.56 million in revenues. Meanwhile, the company’s net profit stood at P687.17 million, a turnaround from P12.48-million loss last year.
The company was incorporated in October 2020 and started its operations in June 2021.
In December last year MREIT acquired four commercial properties worth P9.1 billion. The acquisition further expanding its portfolio’s gross leasable area (GLA) by 25% to 280,000 square meters (sq.m.) from 224,000 sq.m. since its stock market debut in September 2021.
As of March, MREIT’s fair values of its investment properties stood at P59.3 billion.
In addition, the company is eyeing to buy four more prime properties worth P5.3 billion this month, which could expand its GLA portfolio by 16% to 325,000 sq.m.
“If the acquisitions go through in the second quarter, we may see earnings at around P800 million,” Mr. Mangun said.
He pegs the stock’s support level at P17.25 and its resistance level at P18.80.
For Mr. Arce, he forecasts a net income of P790 million for the second quarter and P2.3 billion for the entire year.
“MREIT’s solid Q1 performance is seen to sustain its growth. Rent escalation, steady occupancy and aggressive acquisition plans puts MREIT on track to deliver targeted returns to its shareholders in 2022,” Mr. Arce said.
Mr. Arce’s support level for MREIT this week ranges from P16.70 to P17.00 while resistance at P18.00 to P18.38. — Ana Olivia A. Tirona
