MAPLETREE LOGISTICS TRUST
M44U.SI
Mapletree Logistics Trust - Ongoing Restructuring
- 1H/2QFY16 results met our expectations as DPU declined 1.9%/1.1% YoY.
- Maintain NEUTRAL and SGD0.93 TP (-2.9% total return).
- We note that average rental reversion for the portfolio has softened to 3%, as management cited increasing difficulty in commanding higher rental rates from tenants. However, portfolio occupancy rates inched up slightly to 96.9% as several properties were converted to multi-tenanted buildings.
Results in line with our expectations.
- Mapletree Logistics Trust’s 1H/2QFY16 (Mar) DPU declined 1.9%/1.1% YoY, meeting ~47% of our full-year estimates. We note that the overall portfolio occupancy level inched up slightly to 96.9% (1QFY16: 96.6%), mainly due to higher occupancies at several properties that were converted to multi-tenanted buildings (MTBs).
- In addition, net property income (NPI) margin has been compressed due to higher property expenses incurred during the conversion of single-user assets (SUAs) into MTBs. During this ongoing transition, we expect NPI margins to be under pressure as property expenses continue to escalate.
Lower positive rental reversion booked for the quarter.
- Amid the uncertain macroeconomic environment, the REIT faced increasing difficulties in commanding higher rental reversion. Mapletree Logistics Trust booked in a lower average rental reversion of 3% (1QFY16: 5%) for the quarter, as its tenants experienced thinner margins.
- Looking forward, we expect such challenges to persist as management has also expressed concerns over older assets, but remained confident in assets with good specifications.
Maintain NEUTRAL with a TP of SGD0.93.
- The REIT is currently undergoing a portfolio restructuring and we are expecting headwinds for the next two quarters.
- We also note that the leasing market in Singapore continues to face headwinds, as management noted that tenants are not willing to commit space earlier.
- We take a cautious position as Mapletree Logistics Trust’s gearing increased to 38.8% mainly due to additional loans drawn from its acquisition in Australia.
- We reiterate our NEUTRAL recommendation with a DDM-derived TP of SGD0.93.
Ivan Looi
RHB Research
|
Ong Kian Lin
RHB Research
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http://www.rhbinvest.com.sg/
2015-10-21
RHB Research
SGX Stock
Analyst Report
0.93
Same
0.93
