{"id":323685,"date":"2023-06-15T00:29:40","date_gmt":"2023-06-14T16:29:40","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323685"},"modified":"2023-07-13T00:37:00","modified_gmt":"2023-07-12T16:37:00","slug":"stock-in-focus-rl-commercial-reit-rcr-15-jan-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-rl-commercial-reit-rcr-15-jan-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: RL Commercial REIT (RCR) – 15 June 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>RCR<\/td><\/tr>
Company Name<\/strong><\/td>RL Commercial REIT Inc.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>15 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 6.10<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We have a BUY rating and<\/strong> Target Price of Php6.10 on RCR<\/strong>, which offers a total return potential of 12.4%, inclusive of the 12-month forward dividend yield of 6.7%.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Diversified tenant base minimizes impact of backouts on dividends<\/strong><\/p>\n\n\n\n

RCR has a diversified tenant base with each tenant only occupying ~4% of GLA on average. Most of its tenants comprises of high-quality business process outsourcing (BPO) companies (~69% of total GLA) with minimal exposure to the POGO sector (~2% of total GLA). Because of RCR\u2019s high-quality and diversified tenant base, we think that downside risk from potential tenant back-outs should not have a significant impact to RCR\u2019s dividends.<\/p>\n\n\n\n

Possible mall infusion may unlock further dividend growth<\/strong><\/p>\n\n\n\n

RCR\u2019s sponsor has 1.6 million sqms of mall GLA that are available for infusion. Its mall revenues in 1Q 2023 rose 46% y\/y to Php3.9 billion (110% of 4Q 2019 levels), underpinned by pent-up consumption spending. Moving forward, we project 2023 mall revenues to reach Php16.5 billion (+26% y\/y) and 2023 mall occupancy rate of 92%. These would be supported by full economic reopening, and higher mall rents driven by tenant sales growth.<\/p>\n\n\n\n

Valuation<\/strong><\/p>\n\n\n\n

Our Target Price is based on a 5-year dividend CAGR of 3%, and a terminal growth rate of 3%, discounted using cost of equity of 9.25%. We are cognizant of the potential downside risk from the rising work-from-home (WFH) trends to RCR\u2019s office vacancy. Nevertheless, we think that its long-term growth opportunities via asset infusions could outweigh office headwinds. Furthermore, its sponsor Robinsons Land Corp. (RLC) has 1.6mn sqms of mall GLA that are available for infusion. The potential infusion of these mall properties could pose further upside to RCR\u2019s dividends assuming the mall properties would outperform due to rising domestic consumption trends.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>