Mapletree Logistics Trust - OCBC Investment 2017-01-25: No surprises for 3QFY17

MAPLETREE LOGISTICS TRUST M44U.SI

Mapletree Logistics Trust: - No surprises for 3QFY17

Mapletree Logistics Trust’s (MLT) 3QFY17 results came in within our expectations.
Gross revenue and NPI grew 7.4% and 7.7% YoY to S$95.5m and S$79.9m, respectively.
Growth was underpinned largely by four acquisitions in Australia, Malaysia and Vietnam, contribution from properties which have completed their redevelopment, and higher revenue from existing properties in Hong Kong. However, DPU came in flat YoY at 1.87 S cents due to higher management fees, borrowing costs, distribution to perpetual securities holders and an enlarged unit base.
On a 9MFY17 basis, MLT’s gross revenue rose 5.8% to S$276.7m and accounted for 74.7% of our FY17 forecast. DPU of 5.58 S cents was unchanged from the same period in the preceding year and formed 75.6% of our full-year forecast.
Operationally, MLT’s occupancy was slightly lower from 96.4% (as at 30 Sep 2016) to 96.1%, while positive average rental reversions of 2% were achieved. This ranged from 1% (Singapore and Vietnam) to 4% (Hong Kong and China).

On 15 Dec last year, MLT announced that it had completed the acquisition of a portfolio of four logistics properties located in Victoria, Australia for an aggregate purchase consideration of A$142.2m (~S$151.9m). This latest transaction is expected to generate an initial NPI yield of 7.6% and will increase MLT’s gross revenue exposure to Australia from 6.1% to 9.0%.
The four properties are 100% leased to established companies such as Fuji Xerox Businessforce, Bridgestone Australia and Woolworths Ltd with a combined WALE (by revenue) of 6.4 years.

In terms of financial position, MLT’s gearing ratio stood at 38.7%, as at 31 Dec 2016, a slight increase from 37.6% (as at 30 Sep 2016) largely due to the aforementioned acquisition.
We adjust our FY17 and FY18 DPU forecasts upwards by 0.3% and 1.8%, respectively, after factoring in contributions from the newly acquired assets.
We also bump up our risk-free rate assumption to 2.7% (previously 2.4%) given a steeper yield curve environment.
Consequently, our fair value estimate increases marginally from S$1.05 to S$1.06. Maintain HOLD.

Wong Teck Ching Andy CFA OCBC Investment | http://www.ocbcresearch.com/ 2017-01-25

OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 1.06 Up 1.050