DBS Group Research 2015-07-02: Mapletree Logistics Trust - Surprising on Growth. Upgrade from HOLD to BUY and Raised DCF-based TP S$1.31


  • Beating our acquisition estimates, upgrade to BUY. 
  • We upgrade our Call from HOLD to BUY and raised our DCF-based TP of S$1.31. 
  • Recent acquisitions have placed the trust back on a growth path with more to follow. 
  • Yields are attractive at >6.5%, with upside of 16%. 

Australia, a new growth market. 

  • MLT has beat our initial S$100m acquisition estimates for FY16F through sealing c.S$300m worth of deals YTD. The latest being a A$253m (S$261.5m) cold warehouse in Sydney, its first foray into Australia. 
  • While initial yields appear low at 5.6%, we note the property’s strong specifications and long term lease of 19 years, supportive of valuations and earnings. 
  • The purchase is expected to be fully debt funded (gearing to rise to 38.6% post deal) and grow DPU by 1%. 
  • The manager targets to grow its Australia portfolio to c.S$500m over the next 12-18 months. 
  • In addition, we see further expansion opportunties in the medium term through its sponsor pipeline, which are mainly under development at this point. 

Asset reconstitution strategy in place. 

  • MLT has demostrated the ability to sell well in the past and is looking to divest certain lower yield properties in Singapore and Japan where valuations have increased due to compressed cap rates. 
  • Proceeds from these divestments can be redeployed to higher yielding and acquisitions with brighter growth prospects. 


  • Our target price of S$1.31 is based on the discounted cash flow (DCF) method. 
  • At its current price, MLT offers investors dividend yields of 6.6%-6.9% for FY16-17F. 
  • We upgrade to BUY

Key Risks to Our View: 

  • Vacancy risks in Singapore worse than expected. Worse than projected vacancy risks in Singapore from conversions over 2016-2017 could mean downside to estimates.

(Derek TAN; Mervin SONG, CFA; Rachael TAN)

Source: http://www.dbsvickers.com/