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