MAPLETREE LOGISTICS TRUST
M44U.SI
Mapletree Logistics Trust: Downgrade to HOLD following share price run-up
- 4QFY16 DPU fell 2.7% YoY
- Rental reversions have moderated
- Uncertain outlook ahead
4QFY16 results within expectations
- Mapletree Logistics Trust (MLT) reported its 4QFY16 results which were in-line with our expectations.
- DPU slipped 2.7% YoY to 1.80 S cents despite a 4.4% growth in gross revenue to S$88.4m. This was due largely to a lower NPI margin of 81.7% (-1.4 ppt YoY), higher management fees and an increase in borrowing costs.
- For MLT’s full year results, gross revenue rose 6.0% to S$349.9m and formed 99.7% of our FY16 projection.
- DPU of 7.38 S cents represented a decline of 1.6% and accounted for 99.1% of our forecast.
Some leasing risks ahead
- During FY16, MLT renewed/replaced 631,000 sqm of leases which were due to expire, and achieved an average positive rental reversion rate of 4%. However, rental reversions have moderated, coming in at 0.6% in 4QFY16.
- On a positive note, management actively pursued its forward renewals, and as a result brought down its lease expiries in FY17 to 14.6% of NLA, versus 21.1% at the start of FY16.
- However, MLT still has some leasing risks ahead, in our view, including six single-user assets (SUA) that are due for renewal. Of these six, two are from Singapore and both tenants have already indicated their intention not to renew their leases.
- The biggest risk comes from KPPC Co Ltd in Korea, one of MLT’s top ten customers, which contributed 2.7% of MLT’s gross revenue.
Downgrade to HOLD
- We lower our FY17 DPU forecast by 4.3% as we factor in lower NPI margin and higher finance cost assumptions.
- Rolling forward our valuations, our DDM-derived fair value estimate dips from S$1.04 to S$1.02.
- MLT’s share price has increased 9.1% YTD and 18.9% since we upgraded the stock to a ‘Buy’ on 26 Jan this year.
- In light of its strong share price performance, coupled with a reduction in our fair value and uncertain near-term outlook ahead, we downgrade MLT to HOLD.
- The stock trades at FY17F distribution yield of 6.8%, which is slightly below its 5-year average forward yield of 6.9%.
Wong Teck Ching Andy CFA
OCBC Securities
|
http://www.ocbcresearch.com/
2016-05-03
OCBC Securities
SGX Stock
Analyst Report
1.02
Down
1.04