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Mapletree Industrial Trust - Maybank Kim Eng 2016-01-27: Respectable, in Difficult Environment

Mapletree Industrial Trust - Maybank Kim Eng 2016-01-27: Respectable, in Difficult Environment MAPLETREE INDUSTRIAL TRUST ME8U.SI 

Mapletree Industrial Trust (MINT SP) - Respectable, in Difficult Environment 


3Q in line, maintain HOLD 

  • MINT put in another respectable quarter, with 9M revenue and DPU at 75.5%/77.7% of our FY15F. 
  • Occupancy improved third quarter running. 
  • Rent reversions were low, reflecting a weak economy. 
  • We lift DPUs by 0.5-1% for slightly higher occupancy assumptions. Applying our 7.25% yield target to FY3/17 DPU, our TP rises accordingly to SGD1.50 from SGD1.49. 
  • Maintain HOLD in view of a still-difficult operating environment. 
  • MINT remains our preferred SREIT on DPU growth visibility. 


Respectable operating metrics 

  • 3Q3/16 revenue and DPU grew 6.6% and 5.6% YoY respectively, led by full-year contributions from the Equinix built-to-suit data centre, and occupancy growth to 94.7% from 93.8% in 2Q3/15 and 90.8% in 3Q3/15. 
  • The growth was broad-based: factories 94.8% (94.6% in 2Q), high-spec ex-Equinix 90.6% (88.7%), business parks 90.3% (89%), stack-ups 97.4% (95%), and light industrial 100% (100%). 
  • Rent reversions were in the low single digits, respectable given weak market demand. 

Clear DPU growth path from new developments 

  • MINT is one of the few SREITs out there with clear growth visibility. 
  • A build-to-suit project with Hewlett Packard and a new high-spec building at Kallang Basin 4 are likely to support DPU growth of c.10% in FY3/18. This translates into attractive forward yields of 8% in the longer term. 

Very low debt, higher odds of accretive growth 

  • Aggregate leverage of 29.3% should stabilise at c.32% as some extra leverage is required for developing the above two projects. This still leaves c.SGD450m of debt headroom before its leverage hits 40%. 
  • Untapped firepower represents 17% of its market cap, that could be deployed for catalytic acquisitions, in our view. 



Joshua Tan Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2016-01-27
Maybank Kim Eng SGX Stock Analyst Report HOLD Maintain HOLD 1.50 Up 1.49


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