Mapletree Logistics Trust - CGS-CIMB Research 2018-07-24: Acquisition Momentum Continues

Mapletree Logistics Trust - CGS-CIMB Research 2018-07-24: Acquisition Momentum Continues MAPLETREE LOGISTICS TRUST SGX:M44U

Mapletree Logistics Trust (MLT) - Acquisition Momentum Continues

  • Mapletree Logistics Trust's 1QFY3/19 DPU within expectation, at 25% of our FY3/19 forecast.
  • Bottomline boost from organic revenue improvement and new acquisitions.
  • More contributions from China from 2QFY19F onwards.
  • Singapore portfolio to be rejuvenated, pending completion of proposed transaction.
  • Maintain ADD with unchanged Target Price of S$1.39.

1QFY3/19 results highlights

  • Mapletree Logistics Trust (MLT) reported 1QFY3/19 revenue of S$105.4m, up 10% y-o-y, while NPI improved 11% y-o-y to S$89.8m, thanks to higher revenue from existing properties and acquisition in Hong Kong, albeit partly offset by income vacuum from divestment of five assets and weaker HK$ and yen. io.
  • 1Q DPU rose 3.7%

Committed portfolio occupancy up; positive rental reversion

  • Portfolio occupancy slipped a slight 0.9% to 95.7%, dragged down by lower Singapore, South Korea, and Vietnam take-up as well as inclusion of occupancy of its 50%-owned JV China portfolio. 
  • Including pre-commitments of the latter, overall portfolio occupancy would have been 97.1%, up q-o-q. The trust achieved positive rental reversion of 2.1% during the quarter, led by HK, China and Malaysia while Singapore renewals remained fairly flat. io.

Earnings boost from China acquisition from 2QFY19F onwards

  • 1QFY3/19 was an active quarter with MLT announcing two major transactions – the first was the acquisition of a 50% stake in 11 China properties from its sponsor for c.Rmb1.4bn (S$296.5m), completed in Jun. We expect the positive boost from this purchase to be felt from 2QFY3/19F onwards.

Rejuvenating Singapore portfolio

  • MLT also proposed the purchase of 5 Singapore ramp-up properties from CWT International for S$730m (all-in cost S$778.3m inclusive of an upfront land premium of S$48.3m). The deal is subject to approvals from relevant authorities and CWT shareholders. io.
  • The acquisition NPI yield of 36.4%, we anticipate this purchase to be funded by a combination of debt and equity as well as potential monetisation of some older assets. io. 
  • Post purchase, Singapore would account for c.33% of assets under management (AUM) and c.41% of revenue. Our current DPU projections have not included any impact from this acquisition.

Maintain ADD

  • We tweak our Asia Pacific logistics story. io.
  • Income visibility is strong with 82% of its interest rates fixed and c.73% of its amount distributable for FY19F hedged or in S$. 
  • Potential re-rating catalysts are accretive new acquisitions that would continue to drive DPU growth. io.
  • Downside risks include rising trade tension.

LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://research.itradecimb.com/ 2018-07-24
SGX Stock Analyst Report ADD Maintain ADD 1.390 Same 1.390