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Investing.com - UBS initiated coverage on IGB REIT (IGBREIT:MK) with a Buy rating and a price target of MYR3.11, citing expectations for above-trend distribution per unit (DPU) growth.
The research firm projects +9.6% DPU growth for IGB REIT during the 2024-27 period, driven by improving retail mall fundamentals and potential for further positive rent reversions.
UBS believes these factors could lead to incremental DPU upgrades for the Malaysian real estate investment trust, while a narrowing illiquidity premium justifies a tighter dividend yield.
The MYR3.11 price target implies a 4.5% dividend yield on 2027 dividend, representing approximately a 1.0% spread to Malaysia 10-year government bond yields, which sits at the tighter end of IGB REIT’s historical range.
UBS considers the current dividend yield spread, which is slightly below its historical mean, as attractive and indicates that the upside potential is not fully reflected in the current share price.
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