Mapletree Logistics Trust - CGS-CIMB Research 2018-10-23: Stable Performance


Mapletree Logistics Trust - Stable Performance

  • Mapletree Logistics Trust’s 2QFY19 / 1HFY19 DPU of 1.958 / 3.915 Scts was within our expectations.
  • Portfolio occupancy improved q-o-q to 97.6%. The trust also achieved average positive rental reversion of 1.3%.
  • Maintain ADD. Our Target Price remains at S$1.39.

2QFY3/19 results summary

  • Mapletree Logistics Trust (MLT)’s 2Q19 DPU of 1.958 Scts (+3.8% y-o-y) was in line and formed 25% of our FY19 forecast. This was contributed by 13.8% y-o-y revenue growth driven by organic expansion, the two recent acquisitions in Hong Kong and the acquisition of a 50% stake in 11 China properties. This was partly offset by the lack of contributions from divestments in FY18 and 1QFY19 as well as expansion in unit base from the equity fund raising exercise.
  • For 1H19, Mapletree Logistics Trust’s DPU of 3.915 Scts was 3.7% higher y-o-y and formed 50% of our FY19 forecast.

Improving portfolio occupancy, positive rental reversion

  • Mapletree Logistics Trust’s portfolio occupancy continued to rise q-o-q to 97.6%, lifted by higher take up in Singapore, South Korea, China and Vietnam as well as the inclusion of the five recently acquired Singapore ramp-up assets. As its properties are largely used to support domestic consumption, leasing activities have remained relatively robust.
  • Mapletree Logistics Trust achieved average portfolio positive rental reversion of 1.3%, led by Hong Kong, South Korea, China, Vietnam and Singapore. This more than offset the frictional weakness in Malaysia.

Newly-acquired Singapore assets to contribute fully from 2HFY3/19

  • The purchase of five Singapore ramp-up assets from CWT was completed from 2HFY3/19.
  • The assets were purchased at an NPI yield of 33% of AUM and diversify portfolio tenant base to more F&B (22%) and multi-sector (18%).

Bulk of FY3/19 income hedged, no near term refinancing risks

  • Post equity fund raising, Mapletree Logistics Trust’s balance sheet remains robust with gearing at 3% and no refinancing risk for the remainder of FY3/19. About 8% of its FY3/19 income has been hedged at end-Sep 2018. An estimated 8% of its debt is in fixed rates, largely mitigating risk of rising interest cost.
  • Mapletree Logistics Trust is also looking to divest some overseas assets, particularly in Japan, Malaysia and South Korea to unlock value and recycle capital.

Maintain ADD

  • We tweak our FY19-21 DPU forecasts post results and incorporate net contributions from acquisition cost of equity of 8.7%. Our DDM-based Target Price remains unchanged at S$1.39.
  • We continue to like Mapletree Logistics Trust’s organic and inorganic rising trade tensions and higher interest rates.

LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://research.itradecimb.com/ 2018-10-23
SGX Stock Analyst Report ADD MAINTAIN ADD 1.390 SAME 1.390