MAPLETREE INDUSTRIAL TRUST (SGX:ME8U)
Mapletree Industrial Trust - Rental Reversions Stabilising
- Mapletree Industrial Trust's 3QFY20 DPU rose 2.9% y-o-y.
- Only Flatted Factories saw negative rental reversions.
- Raise Fair Value to S$2.87.
3QFY20 results in-line with our expectations
- MAPLETREE INDUSTRIAL TRUST (SGX:ME8U) reported its 3QFY20 results which met our expectations. Gross revenue and NPI saw an improvement of 9.7% and 14.0% to S$102.6m and S$81.9m. This was driven largely by acquisitions and higher revenue contribution from 30A Kallang Place (ramp up in occupancy). DPU grew 2.9% y-o-y to 3.16 S cents. See Mapletree Industrial Trust Announcements.
- On a 9MFY20 basis, Mapletree Industrial Trust recorded a 9.7% and 13.2% increase in gross revenue and NPI to S$304.1m and S$239.8m, respectively.
- DPU of 9.39 S cents represented growth of 3.4% and constituted 75.0% of our FY20 forecast. See Mapletree Industrial Trust Dividend History.
Rental reversions turned positive for all segments except for Flatted Factories
- Operationally, Mapletree Industrial Trust’s rental reversions for renewal leases appear to have bottomed out, as positive rental uplifts were recorded for Hi-Tech Buildings (+1.4%), Business Park Buildings (+0.2%) and Stack- Up/Ramp-Up Buildings (+1.6%). Only the Flatted Factories segment registered negative rental reversions during the quarter (-1.1%), a stark contrast to the past few quarters in which most or all of Mapletree Industrial Trust’s segments had recorded negative rental reversions.
- There was also an improvement in overall portfolio occupancy from 90.5% (end-2QFY20) to 90.9%. This was driven by a healthy pick up for Business Park Buildings (+3.2 ppt q-o-q) and Hi-Tech Buildings (+1.5 ppt q-o-q), but partially offset by a 0.6 ppt decline for Flatted Factories.
- According to CBRE, Singapore's manufacturing sector showed some early signs of recovery in 4Q19, and there were pockets of leasing demand seen, a handful of which were for expansion.
Recalibrating assumptions
- We maintain our DPU forecasts given this in-line set of results. However, we lower our cost of equity assumption from 7.6% to 6.8% on account that Mapletree Industrial Trust’s rental reversions has likely reached a nadir, coupled with our expectations of robust growth in North America’s cloud data centre capex ahead.
- Our fair value estimate is lifted from S$2.55 to S$2.87. See Mapletree Industrial Trust Share Price; Mapletree Industrial Trust Target Price.
OCBC Research Team
OCBC Investment Research
|
https://www.iocbc.com/
2020-01-22
SGX Stock
Analyst Report
2.87
UP
2.550
