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Investing.com - KDX Realty Investment Corp (8972:JP) received an upgrade from CLSA on Friday, with the firm raising its rating from Hold to Outperform and increasing its price target to JPY186,000 from JPY152,000.
The upgrade follows KDX Realty’s updated medium-term distribution per unit (DPU) growth target of 3%+ per annum, which the company plans to achieve through rent growth and accretive external growth as it improves its portfolio through asset turnover.
CLSA noted that KDX Realty currently has JPY133 billion in unrealized gains and targets annual sales of JPY30-50 billion, with plans to use cash gains to acquire newer assets with rent growth upside.
The research firm acknowledged that earnings per unit excluding capital gains may decrease in the short term as divestments will occur before acquisitions, but emphasized that rent growth is expected across all asset classes.
CLSA cited KDX Realty’s attractive 5% dividend yield as part of its rationale for the upgrade, with the new price target based on a dividend discount model (DDM) valuation.
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