MAPLETREE LOGISTICS TRUST
M44U.SI
Mapletree Logistics Trust - Firepower to acquire
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 BUY call and TP at S$1.15 which has imputed acquisitions in our forecasts.
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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Singapore Research Team
DBS Vickers
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Mervin Song CFA
DBS Vickers
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http://www.dbsvickers.com/
2017-01-04
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