MAPLETREE LOGISTICS TRUST (SGX:M44U)
Mapletree Logistics Trust - Easing Into A Larger Base
In line; maintain HOLD
- Mapletree Logistics Trust's 2Q19 DPU of 1.958 SGD cts, up 3.8% y-o-y, is in line with Street and our estimates.
- We fine-tune estimates for the 28 Sep closure of its acquisition of five Singapore logistics properties. While these properties could boost revenue / NPI by 4% / 11% through FY20E, our estimates on DPU accretion are more limited, given funding from a 9.6% increase in new equity and higher borrowing costs.
- Maintain HOLD to our unchanged DDM-based Target Price of SGD1.30 (COE 7.4%, LTG 1.5%).
- Our top industrial-sector pick remains the business-park-focused Ascendas REIT (SGX:A17U).
Broad-based occupancy improvements
- Mapletree Logistics Trust's 2Q19 revenue and NPI jumped 48% and 46% from organic growth and two HK Tsing-Yi and a 38% interest offset divestments in FY18 and 1Q19.
- Portfolio occupancy improved q-o-q from 95.7% to 97.6% in occupancy dipped from 100% to 98.6% due to transitional vacancies. Rental reversions at +1.3% were attributable to HK Vietnam were head of Singapore South Korea’s China’s Malaysia’s - 5.7%.
- Mapletree Logistics Trust's Shah Alam faced new management shared that demand in all markets remains as a war.
Balance sheet worked hard; AUM up 13% q-o-q
- Mapletree Logistics Trust's acquisition of the five Singapore ramp-up properties for SGD730.0m and a SGD48.3m upfront land premium for their balance lease terms was completed on 28 Sep. As such, AUM increased 13% q-o-q to SGD7.6b.
- Equity rose 10%, following a private placement of 9.6% new units at SGD1.21 each, which raised SGD375.0m.
- Debt also increased 18% to SGD3.0b, pushing up gearing from 36.4% to 38.1%. Though this is higher than its 5-year average, Mapletree Logistics Trust remains in an acquisition mode. It is eyeing its sponsor’s remaining 50% interest in its China JV portfolio (now at 99% occupancy), and targets to close smaller third-party deals in Vietnam and Malaysia in the next 6-9 months.
Swing Factors
Upside
- Earlier-than-expected pick-up in leasing demand for logistics space driving improvement in occupancy.
- Better-than-anticipated rental reversion trend.
- Accretive acquisitions.
Downside
- Prolonged slowdown in economic activity could reduce demand for logistics space, resulting in lower occupancy and rental rates.
- Termination of long-term leases contributing to weaker portfolio tenant retention rate.
- Significant volatility in foreign currency exchange rates could impede hedging efforts and impact DPU estimates.
- Sharper-than-expected rise in interest rates could increase cost of debt and negatively impact earnings, with higher cost of capital lowering valuations.
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2018-10-23
SGX Stock
Analyst Report
1.300
SAME
1.300