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Company Update – KLCC Property (BUY, maintain) - A premium big cap high yielding stock in the making




Affin Hwang Investment Bank Bhd


17 Dec 2012





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Creation of stapled security to raise FY13-14 EPS by 16-17% KLCCP had on 13 & 14 December 2012 submitted the applications to SC and BNM regarding its proposal to create the KLCCP Stapled Group. To recap, KLCCP had on 27 November 2012 announced several corporate exercises with the aim to establish a stapled security comprising of KLCC REIT and KLCCP. These include: (i) proposed injection of Petronas’ 49.5%-stake in Petronas Twin Towers into KLCCP at RM2.86bn for 510.6m of new KLCCP shares; and (ii) establishment of KLCC REIT consisting of Petronas Twin Towers, Petronas Tower 3 and Menara ExxonMobil. The KLCC REIT and KLCCP shares will be stapled, listed on Bursa Malaysia and traded as one business entity. Overall, we are positive on the exercise – we expect the new corporate structure to raise KLCCP’s FY13-14 EPS by 16-17% mainly arising from tax savings in KLCC REIT. Importantly, management intends to payout over 90% of the group’s distributable net profit. We had therefore lifted our FY13-14 DPS forecast to 32- 33 sen (from 18-19 sen), based on a 90% payout ratio

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