Mapletree Logistics Trust - CGS-CIMB Research 2019-07-23: Stable Ship In Choppy Waters


Mapletree Logistics Trust - Stable Ship In Choppy Waters

  • We maintain our HOLD call with a lower target price of S$1.55 due to a softer leasing environment in Singapore and Hong Kong.
  • Cautious sentiment is returning in Singapore and Hong Kong although portfolio quality could still keep occupancies and rental reversions resilient.
  • 1Q20 DPU of 2.025 Scts was in line at 25% of our/consensus forecasts.

MLT's 1QFY3/20 results in line at 25% of our/consensus forecasts

  • MAPLETREE LOGISTICS TRUST (SGX:M44U)'s 1Q20 DPU of 2.025 Scts (+3.5% y-o-y, +0.0% q-o-q) was in line, forming 25% of our/consensus FY3/20 forecasts. This was due to a 13.6% y-o-y rise in revenue due to contributions from redevelopments and accretive acquisitions but partially offset by the divestment of five properties in Japan and two properties in Singapore.

Portfolio quality could keep rental reversions positive

  • Rental reversion of +1.8% marked the 12th straight quarter of positive rental reversions; this was driven by China, Hong Kong and Vietnam. Portfolio occupancy declined slightly to 97.6% (98.0% in 4QFY3/19) due to Singapore, Hong Kong and South Korea but slightly offset by China, which saw an improvement in the Waigaoqiao and Zhenjiang assets.
  • While sentiment in major transshipment hubs like Singapore and Hong Kong was dampened by the trade war, Mapletree Logistics Trust expects its ramp-up properties to remain resilient and continue showing positive, albeit less aggressive, rental reversions.

Not forcing acquisitions but still maintaining opportunistic stance

  • In Jul 19, it was reported that Blackstone sponsor for c.¥100bn. This that such a deal may not have been accretive for Mapletree Logistics Trust.
  • Mapletree Logistics Trust continues to have a pipeline of c.5m sqm of logistics assets from its sponsor and we think that any possible acquisition could come from China or Vietnam.

Lower proceeds

  • Mapletree Logistics Trust’s aggregate leverage declined to appreciation of ¥ and HK$ against S$.
  • Cost of debt inched up slightly to 2.8% (2.7% in 4QFY3/19) while average debt duration declined to 3.8 years. The distribution reinvestment plan (DRP) has been suspended from 1Q20.

Maintain HOLD with a lower Target Price of S$1.55

  • We tweak our FY20-22 DPU forecasts to reflect our expectations of a more muted leasing environment in Singapore and Hong Kong and derive a slightly lower DDM-based Target Price of S$1.55.
  • Mapletree Logistics Trust continues to trade at a key risk would be.

LOCK Mun Yee CGS-CIMB Research | Ervin SEOW CGS-CIMB Research | https://research.itradecimb.com/ 2019-07-23
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.55 DOWN 1.560