Mapletree Industrial Trust - OCBC Research 2016-07-27: Firm set of 1QFY17 results

Mapletree Industrial Trust - OCBC Research 2016-07-27: Firm set of 1QFY17 results MAPLETREE INDUSTRIAL TRUST ME8U.SI 

Mapletree Industrial Trust: Firm set of 1QFY17 results

  • 1QFY17 DPU grew 4.4% YoY.
  • Higher average portfolio passing rents.
  • Raise FV but maintain HOLD.

1QFY17 results met our expectations

  • Mapletree Industrial Trust (MIT) reported its 1QFY17 results which came in within our expectations. 
  • Gross revenue rose 3.0% YoY to S$84.1m, meeting 24.7% of our FY17 forecasts. This was driven by higher rental rates achieved across all its property segments and improved occupancies at its High-Tech Buildings and Business Park Buildings. 
  • NPI increased at a stronger pace of 6.0% YoY to S$63.8m as a result of better margins for all its business segments, with the exception of Light Industrial Buildings. 
  • DPU of 2.85 S cents represented a growth of 4.4% and constituted 25.6% of our full-year projection.

Mixed rental reversion figures for renewal leases

  • During the quarter, MIT achieved positive rental reversions of 1.3% and 2.1% for its Flatted Factories and Hi-Tech Buildings for its renewal leases. However, renewal rental reversions were negative for its Business Park Buildings (-1.5%) and Stack-Up/Ramp-Up Buildings (-4.7%). 
  • Average portfolio passing rents came in at S$1.92 psf/month, marginally higher than the S$1.90 psf/month rental rate achieved as at end-4QFY16. 
  • Due to MIT’s active lease management, it lowered its expiring leases (by gross rental income) from 21.1% in the preceding quarter to 14.1%. 
  • Overall portfolio occupancy slipped slightly from 94.6% (as at 31 Mar 2016) to 93.0%, with the main drag coming from its Light Industrial Buildings (-11.4 ppt QoQ).

Maintain HOLD

  • In terms of financial position, MIT has a healthy aggregate leverage of 28.2%, which is one of the lowest within the S-REITs universe. 87.6% of its debt has been hedged for a weighted average term of 2.7 years. 
  • Although S$470m of its interest rate hedges will expire in FY17, MIT has already extended or replaced S$200m of these. It expects the replacements of expiring hedges to be more costly in view of the low interest rates of these hedges entered in the past. 
  • We retain our forecasts given this in-line set of results, but raise our fair value from S$1.64 to S$1.67, as we factor in a lower risk-free rate assumption of 2.4% (previously 3.0%) in our model. 
  • Maintain HOLD. 

Wong Teck Ching Andy CFA OCBC Securities | 2016-07-27
OCBC Securities SGX Stock Analyst Report HOLD Maintain HOLD 1.67 Up 1.64