MAPLETREE LOGISTICS TRUST (SGX:M44U)
Mapletree Logistics Trust - More Stable, Less Growth
In line with MKE and consensus; prefer Ascendas REIT
- Following MAPLETREE LOGISTICS TRUST (SGX:M44U)'s in-line 4Q19 (DPU rose 4.5% y-o-y), we have lowered estimates 2-3% due to slightly weaker China growth assumptions. Our DPU estimates are mostly unchanged with Target Price at SGD1.40 (COE: 7.6%, LTG: 2.0%).
- The results reaffirm our view that Mapletree Logistics Trust’s logistics assets have stabilised but growth has slowed due to a larger base; We find the shares fairly valued and maintain HOLD.
- Our forecasts factor in recent deals (five Japan divestments) with demand for its Singapore high-specs logistics assets supporting occupancies and rents.
- Our top industrial-sector pick remains business-park-focused Ascendas REIT (SGX:A17U) (Rating: BUY, Target Price SGD3.10, see report: Industrial REITs Sector Outlook - Maybank Kim Eng 2019-04-17: Bottoming Out; Overseas Deals To Lift DPU, Singapore REITs - Maybank Kim Eng 2019-04-03: Patience Rewarded), which trades at a similar 5.6% yield but offers stronger DPU growth (+3.5% 3-year CAGR) and stronger balance sheet for acquisitions.
Occupancy up slightly; broad-based improvement
- Mapletree Logistics Trust's 4Q19 revenue/NPI rose 13.0%/15.0% y-o-y as redevelopment projects (76 Pioneer Road, Ouluo Phase 1 in China) and acquisitions offset two Singapore divestments.
- Occupancy rose q-o-q to 98.0% with growth except in China (down from 95.8% to 95.5%). Tenant, JD.com (JD US, Not Rated) downsized earlier with some space backfilled at +2-3% rental reversion.
Firm demand for CWT assets, limited downside risk
- We believe demand for newer high-specs logistics properties in Singapore will remain tight due to expansion activities (Amazon, etc).
- Management indicates keen leasing interest from 3PLs for its CWT-related properties, especially for 6 Fishery Port (equipped with food storage facilities); CWT’s receivers are unlikely to disrupt its Singapore operations.
SGD475m debt headroom - eyeing China ROFR assets
- Management continues to see better DPU visibility in Hong Kong (22.0% of its revenue) and China (10.1%) in tier-1 cities due to tight supply. In Vietnam, spill-over gains from the China-US trade conflict should likewise support DPU growth.
- Mapletree Logistics Trust remains optimistic on the China logistics market, and will be selective on deals from its sponsor.
- It still has debt headroom of around SGD475m (at 45% limit) for ROFR deals to support growth. Gearing was 37.7% at end-Mar 2019, but it has since declined to 36.2% following its 10 Apr SGD213.3m Japan divestments.
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2019-04-29
SGX Stock
Analyst Report
1.400
SAME
1.400
