MAPLETREE LOGISTICS TRUST
M44U.SI
Mapletree Logistics Trust - Firepower to acquire
- 2Q17 results in line; DPU flat despite operational headwinds.
- More capital to deploy for acquisitions.
- BUY maintained, TP S$1.15.
Maintain BUY, TP S$1.15.
- Mapletree Logistics Trust (MLT) is emerging stronger post balance sheet recapitalisation and we see acquisitions as a catalyst to drive earnings and share price upside.
- With firepower to execute on strategic purchases, MLT remains on a growth path.
- BUY maintained, yield of 7.0-7.2% is attractive for a strong quality name.
Acquisitions and developments to drive growth
- The issuance of S$250m perpetual securities in May 2016 @ 4.18% has enabled MLT to lock in attractive long-term funding for the REIT. Since then, MLT has deployed close to S$161m and we see more acquisitions in the pipeline.
- We believe that opportunities will come from its Sponsor, and third parties in Australia, Korea, and China.
- Acquisitions should more than compensate for weaknesses in the various markets that MLT operates in.
2Q16 results in line.
- Top line and net property income are up 4.7% and 5.3% y-o-y to S$91.5m and S$76.8m respectively.
- Higher revenues were mainly driven from acquisitions (portfolio expanded by six properties to 124 as of 2QFY17).
- Distributable income is up by 1.0% while DPU is flat mainly due to higher interest incurred on the issuance of close to S$250m worth of perpetual securities.
Valuation
- We upgrade our call to BUY, and raise our TP to S$1.15 after imputing acquisitions in our forecasts.
- The stock offers a total potential return of 16% (9% upside, 7% yield).
Key Risks to Our View
- Acquisitions ramping up faster than expected. A faster-than- projected acquisition pace or a better-than-expected outlook for the Singapore warehouse market will translate to positive surprises to earnings estimates, and re-rate the stock higher.
Derek Tan
DBS Vickers
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Mervin Song CFA
DBS Vickers
|
http://www.dbsvickers.com/
2016-10-26
DBS Vickers
SGX Stock
Analyst Report
1.15
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1.150
