Mapletree Industrial Trust (MINT SP) - DBS Research 2018-01-24: Another Excellent Quarter

Mapletree Industrial Trust (MINT SP) - DBS Vickers 2018-01-24: Another Excellent Quarter MAPLETREE INDUSTRIAL TRUST ME8U.SI

Mapletree Industrial Trust (MINT SP) - Another Excellent Quarter

  • Mapletree Industrial Trust (MINT)'s 3QFY18 DPU of 2.88 Scts was 1.8% higher despite dilution from share placement.
  • Operationally stable; negative rental reversions should bottom out in 2H18-2019.
  • Strong leasing enquiries for Kallang Place redevelopment. 
  • Maintain BUY, Target Price S$2.15.

What’s New 

An excellent quarter. 

  • Mapletree Industrial Trust's 3Q18 gross revenues and net property income (NPI) came in 8.3% and 11.7% higher y-o-y to S$92.6m and S$70.7m respectively. The increase in revenue was mainly driven by the contribution from the built-to-suit project for HP Singapore (HP), partially offset by lower portfolio occupancy (90.1% in 3Q18). Keeping a tight rein on cost, MINT’s NPI grew faster. 
  • Mapletree Industrial Trust also reported a partial quarter contribution from the acquisition of a 40% stake in portfolio of 14 data centers in the US boosting distributable income by 4.6% y-o-y to S$54.0m. This translates to a DPU of 2.88 Scts for the quarter, which was only 1.8% higher compared to a year ago, as a result of the enlarged share base post placement in Oct’17.

New-builts seeing improving commitments. 

  • Take-up rates for development project at 30A Kallang Place and Kallang Basin 4 cluster have improved slightly and stand at c.12%. 
  • While completion is planned in the coming months, we understand that leasing enquiries have been picking up and expect committed occupancies to improve further.

Marginal portfolio negative rental reversions but should be basing out. 

  • We saw negative rental reversions across the portfolio with fairly stable retention ratios of c.73.3%.
  • Negative rental reversionary trends should be bottoming out towards 2H18-2019 as the industrial supply tapers off.

Ample capacity to grow. 

  • Balance sheet remains stable post acquisition of portfolio of data centers in the US; gearing inches up slightly to 33.8%. 
  • Weighted average debt tenor shortens slightly to 3.0 years (vs 3.2 years).

Derek TAN DBS Vickers | Melvin SONG CFA DBS Vickers | Singapore Research Team DBS Vickers | 2018-01-24
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 2.150 Same 2.150