Mapletree Logistics Trust - Maybank Kim Eng 2019-10-22: Bulking Up Again


Mapletree Logistics Trust - Bulking Up Again

Results in line with MKE/consensus, HOLD

  • MAPLETREE LOGISTICS TRUST (SGX:M44U)’s logistics assets continued to stabilise in 2Q20 with DPU up 3.4% y-o-y on a larger AUM. Its diversified portfolio, backed by recent FY19 deals, is likely to cushion macro uncertainties.
  • Its latest acquisition of seven high-specs assets from its sponsor should boost NLA further by 9.9% and AUM by 5.2% upon completion.
  • The stock however is likely to be capped in the near-term, as equity fund-raising activity raises DPUs by up to 1.3%. Our DPUs are mostly unchanged after some fine-tuning of estimates. See Mapletree Logistics Trust Dividend History.
  • Our Target Price rises to SGD1.60 (COE: 6.9%, LTG: 2.0%).
  • Our top industrial-sector pick remains the business-park-focused Ascendas REIT (SGX:A17U) (BUY, Target Price SGD3.30, see report: Ascendas REIT - Recovery Underway), which trades at higher 5.6% yields with stronger DPU growth prospects and the balance sheet for acquisitions.

Stronger rental reversions in Malaysia, Vietnam, HK

  • Mapletree Logistics Trust's 2Q20 revenue and NPI rose 14.2% y-o-y and 21.0% y-o-y respectively, driven by:
    1. stable performance across assets;
    2. higher HK contributions;
    3. the completed Ouluo redevelopment; and
    4. earlier acquisitions.
  • Portfolio occupancy was steady at 97.5% with slight dips in China (from 96.4% to 95.4%) and South Korea (98.5% to 98.1%), offset by better performance in HK (97.6% to 99.2%).
  • Rental reversion was +1.8%, led by stronger reversions in HK (+2.9%), Malaysia (+3.1%) and Vietnam (+3.3%). Management cautioned rental reversions for HK are set to ease to +2-3%, from +3-4% previously.
  • Its WALE was stable at 4.6 years, with single-user asset expiries at just 2.0-4.9% over FY20-22.

Another acquisition at 6.1% NPI yield

  • Mapletree Logistics Trust announced another deal to acquire seven high-specs modern logistics properties – one in Malaysia, two in Vietnam and four in China (50% interest) - from its sponsor for SGD422.0m. The properties are all multi-tenanted and fully-occupied, with WALE by NLA of 1.9 years and e-commerce tenancies contributing 45% of their gross revenues.
  • We expect rental growth (now at 20% premium) to be supported by tight supply and positive demand-led fundamentals, especially for Malaysia and Vietnam, which together account for 77% of the deal value. Management is likely eyeing longer-term upside from its China expansion.
  • See Mapletree Logistics Trust Announcements; Mapletree Logistics Trust Latest News.

Funding being firmed up, could add 1.0% to DPU

Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2019-10-22
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.60 UP 1.550