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Mapletree North Asia Commercial Trust - OCBC Investment 2019-07-30: Decent Start 

MAPLETREE NORTH ASIA COMM TR (SGX:RW0U) | SGinvestors.io MAPLETREE NORTH ASIA COMM TR (SGX:RW0U)

Mapletree North Asia Commercial Trust - Decent Start 




1QFY20 results met our expectations

  • MAPLETREE NORTH ASIA COMMERCIAL TRUST (SGX:RW0U) (MNACT) reported its 1QFY20 results which came in within our expectations.
  • Gross revenue and NPI jumped 11.1% and 10.7% y-o-y to S$104.9m and S$85.0m, respectively, with the latter forming 24.8% of our FY20 forecast. Growth was driven by a full quarter contribution from its Japan portfolio, higher rental income from its other properties and higher average rate of HKD but partially offset by a weaker RMB.
  • Mapletree North Asia Commercial Trust's 1Q20 DPU of 1.95 S cents represented y-o-y growth of 3.7% and this constituted 25.0% of our full-year forecast.


Mostly healthy rental reversions but some pressure at Gateway Plaza

  • Operationally, Mapletree North Asia Commercial Trust’s occupancy declined marginally by 0.5 ppt to 99.1% due to Gateway Plaza (GP), which recorded a 1.8 ppt dip. Festival Walk (FW) and its Japan portfolio remained fully occupied.
  • Rental reversions came in at +12% for Festival Walk’s retail component (driven by the lease renewal of one of the anchor tenants) and +5% for the office component; +33% for Sandhill Plaza (SP) and +6% for the Japan properties. However, Gateway Plaza registered rental reversions of -5% from six leases which expired in 1QFY20.
  • According to Mapletree North Asia Commercial Trust, these leases would have formed ~1% of its portfolio gross rental income if we assume a full quarter contribution. Furthermore, management had previously been guiding down market expectations for Gateway Plaza’s outlook, hence this negative rental reversion does not come as a surprise to us.
  • For Festival Walk, retail sales and footfall declined 3.2% and 1.8% y-o-y to HK$1.25b and 9.5m, respectively, which is in-line with the soft GDP and retail market in Hong Kong.


Festival Walk has historically performed resiliently

  • Looking ahead, Mapletree North Asia Commercial Trust will closely monitor the situation with regards to the ongoing protests in Hong Kong, which only started in the middle of Jun. Festival Walk, which is the largest contributor to Mapletree North Asia Commercial Trust (formed 61.9% of 1QFY20 NPI), has historically performed resiliently even during uncertain and challenging periods.
  • We raise our fair value from S$1.40 to S$1.43 after lowering our risk-free rate assumption from 2.3% to 2.0%.





OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2019-07-30
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.43 UP 1.400



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