Mapletree Industrial Trust - Phillip Securities 2016-04-27: A stable set of results in line with expectations

MAPLETREE INDUSTRIAL TRUST ME8U.SI

Mapletree Industrial Trust - A stable set of results in line with expectations

4QFY16 S$83.99mn gross revenue in line with consensus expectations of S$81.35mn and our expectations of S$82.13mn
4QFY16 2.81 cents DPU in line with consensus expectations of 2.70 cents and our expectations of 2.71 cents

Maintain "Accumulate" rating with new DDM valuation of S$1.72 (previous: S$1.70)

Portfolio occupancy rate remains healthy at 94.2% and average portfolio passing rent increased marginally to S$1.90 psf/mth from S$1.89 psf/mth in the preceding quarter.
FY16 net property income (NPI) margin and net margin were 73.9% and 57.5% respectively, in comparison to 72.8% and 56.7% respectively in FY15.

Following the suspension of the Distribution Reinvestment Plan (DRP) in the preceding quarter, Mapletree Industrial Trust (MINT) still has sufficient funds and debt headroom to fund the two ongoing projects of the Hewlett-Packard build-to-suit (BTS) at Telok Blangah Cluster and the asset enhancement initiative (AEI) at Kallang Basin 4 Cluster.
MINT's leverage of 28.2% is one of the lowest among the S-REITs.
With only 4.6% of debt maturing in FY17, the Manager deemed that there is no refinancing risk this year.
Manager shared however, that weighted cost of debt is creeping up at about 0.1pp each quarter, and so is the hedging costs. As such, all-in cost of debt is expected to trend up.

We believe the forward yield of c.6.7% should be sustainable, underpinned by the portfolio's stability and resilience.
Further growth to look forward to will come from the completion of the ongoing BTS and AEI projects.

MINT is trading above the sector average P/NAV multiple and lower than the peer average 12M trailing yield.

Richard Leow CFTe Phillip Securities | http://www.poems.com.sg/ 2016-04-27

Phillip Securities SGX Stock Analyst Report ACCUMULATE Maintain ACCUMULATE 1.72 Up 1.70