Mapletree Commercial Trust - DBS Research 2017-12-11: Room To Surprise On The Upside

Mapletree Commercial Trust - DBS Vickers 2017-12-11: Room To Surprise On The Upside MAPLETREE COMMERCIAL TRUST N2IU.SI

Mapletree Commercial Trust - Room To Surprise On The Upside

  • Increased optimism on the office sector.
  • Raised earnings from office properties, and expect a faster recovery from FY2020F.
  • Target Price lifted to S$1.75.
  • Upgrade from HOLD to BUY.

Upgrade to BUY due to revised optimism on the office sector; TP revised to S$1.75. 

  • We like Mapletree Commercial Trust (MCT) for its quality assets with strong earnings visibility and able to ride through market cycles. Both of its key assets - VivoCity and Mapletree Business City Phase 1 (MBC I) - are gems, given the lack of comparable assets in these market segments. We believe these assets will remain resilient during periods of uncertainty. 
  • We raised our TP from S$1.62 to S$1.75 on the back of improving sentiment in the office sector; the REIT has around 30% exposure in terms of NPI.

Where we differ: faster recovery in the office sector than consensus. 

  • We believe recent market transactions have refreshed optimism in the office sector and therefore expect a faster recovery from 2020F. Our TP is now 5.4% higher than the consensus mean of S$1.66.

Potential Catalyst: Upside potential from VivoCity and MBC I.

  • We have assumed conservative rental reversion at VivoCity in the low single-digit going forward. Any improvement in reversions may lead to earnings and share price upside. Better-than-expected performance from MBC I is another catalyst.


  • Target Price lifted to S$1.75 to reflect higher earnings from office properties, and rolling forward our valuation base to FY18F.
  • Upgrade from HOLD to BUY with total potential return of c.16%, including yield of 5.5%.

Key Risks to Our View

  • Weaker operational performance from VivoCity. Signs of a slowdown are being observed at VivoCity as anticipated as the mall is gradually phasing into a matured stage. Management has been rigorously revamping the offerings of the mall which could mitigate this risk.

Singapore Research Team DBS Vickers | Derek TAN DBS Vickers | Mervin SONG CFA DBS Vickers | http://www.dbsvickers.com/ 2017-12-11
DBS Vickers SGX Stock Analyst Report BUY Upgrade HOLD 1.75 Up 1.620