Mapletree Greater China Commercial Trust - DBS Research 2015-10-28: Consistent Performer

Mapletree Greater China Commercial Trust - DBS Research 2015-10-28: Consistent Performer MAPLETREE GREATER CHINACOMM TR RW06.SI 

Mapletree Greater China Commercial Trust - CONSISTENT PERFORMER 

Allaying market Allaying market fears. 

  • We maintain our BUY call with a revised TP of S$1.11. 
  • While acknowledging the concerns over the slowdown in the HK retail market, we believe this is overplayed near term, given the delivery of a 12.6% y-o-y increase in 2Q16 DPU to 1.808Scts, which was in line with expectations. 
  • Moreover, this risk is accounted for by the 17% discount to MAGIC’s NAV per share of S$1.192. 

Currency tailwinds. 

  • With 70% and 30% of its assets by valuation located in HK and China respectively, MAGIC is a beneficiary of the strengthening HKD and CNY versus SGD. We have conservatively assumed SGD/HKD and SGD/CNY exchange rate (including impact of hedges) of 5.8 and 4.8 respectively in FY16F, and 5.6 and 4.6 in the long term. This compares to the current SGD/HKD and SGD/CNY spot FX rates of 5.55 and 4.55 respectively. 

Full contribution from Sandhill Plaza yet to be realised. 

  • With the S$412m acquisition of Sandhill Plaza in Shanghai only completed in June15, MAGIC’s earnings should receive a boost over the coming year, which should offset any potential slowdown in HK. 
  • Combined with growth in its existing portfolio, this should translate to a 6% three year DPU CAGR. 


  • To account for the deceleration in the Hong Kong retail scene, we trimmed our FY17F DPU by 2% and reduced our DCF-based TP to S$1.11 from S$1.12. 
  • Notwithstanding, with 12% capital upside and 7.3% yield, we reiterate our BUY call. 

Key Risks to Our View: 

  • The key risk to our view is a significant downturn in the HK and Chinese economy, causing a decline in rents at Festival Walk, Gateway Plaza and Sandhill Plaza.

Mervin Song DBS Vickers | Derek Tan DBS Vickers | http://www.dbsvickers.com/ 2015-10-28
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 1.11 Down 1.12