Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

Killam Apartment Real Estate Investment Trust (TSX: KMP.UN) is an open-ended mutual fund trust. The company specializes in the acquisition, management, and development of multi-residential apartment buildings and manufactured home communities (MHC). It has three main operating segments, Apartment segment, MHC segment, and Commercial segments. Apartment segment acquires, operates, manages and develops multi-family residential properties across Canada. MHC segment acquires and operates MHC communities in Ontario and Eastern Canada, and Commercial segment includes more than seven commercial properties.

Kalkine’s Real Estate Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~30.09% of the total shareholding. BMO Asset Management Inc. and RBC Global Asset Management Inc. holds a maximum stake in the company at ~­­­7.00% and ~5.22%, respectively.

1.4 Key Metrics:

The company reported decent growth in its apartment same property average rental rate in Q2 2024, along with improvement in its property revenue and net operating income, which is a key positive. Moreover, the group recorded a healthy trend in minimizing debt to normalized EBITDA and decent funds from operations demonstrating its strength and adaptability.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of the company’s recent activities, such as the announcement regarding rising same property operating margin and minimizing debt.

2.2 Insights of Q2 2024 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed an upside of ~1.22% and ~3.20% over the last 1 week and 1 month respectively. Moreover, the stock is trading above the average 52-week high price of CAD 20.13 and 52-week low price of CAD 15.36 providing an opportunity to ride the trend.

4.2 Fundamental Valuation

Valuation Methodology: EV to Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 19, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.  

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.