Mapletree Industrial Trust - DBS Research 2017-03-30: Turning round the corner

Mapletree Industrial Trust - DBS Vickers 2017-03-30: Turning round the corner MAPLETREE INDUSTRIAL TRUST ME8U.SI

Mapletree Industrial Trust - Turning round the corner

BUY with revised TP of S$1.94. 

  • We maintain our BUY call with a revised TP of S$1.94, offering a total return of 18% (11% upside and 6.7% yield). 
  • We believe that Mapletree Industrial Trust (MINT) offers a commanding 5% CAGR in DPU growth over FY18F-19F, which is more than double that of the industry average. 
  • In addition, we remain confident that the Manager has the flexibility to execute on more developments or acquisitions which present as upside surprise to earnings.

Where we defer. 

  • MINT to benefit from the turnaround of the industrial market. We see the industrial sector bottoming out in 2017, a view which is not shared by consensus at this point. Our positive stance is premised on 
    1. spike in new industrial supply is projected to peak in 2017 (c.13% increase in 2018) and fall substantially from 2018 onwards, 
    2. recent positive numbers coming out of Singapore industrial production, if sustained, could mean that the slack in vacancy rates could be absorbed from 2018 onwards. 
  • MINT with over 31% of its leases up for renewal in 2018, can benefit when these leases are rolled over, implying that consensus earnings could be revised upwards.

Potential Catalyst: Acquisitions/better-than-projected income 

  • Conservative gearing empowers REIT to acquire accretively.
  • MINT’s balance sheet is lowly geared at c.30% and with support from capital markets, MINT has significant debt-funded capacity for M&A, acquisitions or to undertake development opportunities.


  • MINT’s resilience is a value trait in this market and has yet to be reflected in its current share price. 
  • We maintain our BUY call and higher TP of S$1.94.

Key Risks to Our View

  • Rising interest rates. An increase in refinancing rates will negatively impact distributions. However, we note that MINT has minimised these risks by targeting to have 65-70% of interest rates hedged.

Derek TAN DBS Vickers | Melvin SONG CFA DBS Vickers | Singapore Research Team DBS Vickers | 2017-03-30
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 1.94 Up 1.900