Mapletree Logistics Trust - OCBC Investment 2020-01-21: Another Resilient Set Of Results


Mapletree Logistics Trust - Another Resilient Set Of Results

  • Mapletree Logistics Trust's 3QFY20 DPU +2.1% y-o-y.
  • Positive rental reversions of 1.2%.
  • Expect more distributions from divestment gains.

MLT's 3QFY20 results in-line with our expectations

  • MAPLETREE LOGISTICS TRUST (SGX:M44U) reported an in-line set of 3QFY20 results. Gross revenue and NPI increased 0.3% and 3.9% y-o-y to S$121.1m and S$108.6m, respectively. This was driven by organic growth and acquisitions in Australia, South Korea and Vietnam, but partially offset by the divestment of five properties in Japan, coupled with lower land rent recognised with the adoption of SFRS(I) 16. DPU grew 2.1% y-o-y to 2.044 S cents. See Mapletree Logistics Trust Announcements.
  • Mapletree Logistics Trust had recognised a divestment gain of S$23.9m in relation to the sale of Mapletree Waigaoqiao Logistics Park (MWLP) in 3QFY20, and subsequently distributed S$1.8m of the gains during the quarter. It will continue to do so for the next 11 quarters.
  • For 9MFY20, Mapletree Logistics Trust’s gross revenue rose 9.0% to S$362.7m; NPI increased 13.8% to S$323.8m; while DPU improved 3.0% to 6.094 S cents and this formed 76.2% of our FY20 forecast. See Mapletree Logistics Trust Dividend History.

Slight increase in occupancy; rental reversions remain positive

  • Mapletree Logistics Trust continued to exhibit resilience in its operations, as portfolio occupancy increased slightly by 0.2 ppt q-o-q to 97.7% and this was driven largely by Singapore (+0.7 ppt), which helped offset the declines in South Korea (-1.7 ppt) and China (-0.4 ppt). Australia, Japan, Malaysia and Vietnam maintained their full occupancy.
  • On the rental front, management achieved positive rental reversions of 1.2%, which was driven largely by Hong Kong, Vietnam and Malaysia.

Completed acquisitions in fastest growing e-commerce markets

  • Mapletree Logistics Trust completed the acquisitions of seven modern logistics properties in Malaysia (one), Vietnam (two) and China (50% interest in four properties) in Nov and Dec 2019. The implied net property income yield was 6.1% and was funded by partial debt and a private placement exercise which raised gross proceeds of S$250m. These countries are considered to be one of the fastest growing e-commerce markets, with Vietnam, Malaysia and China forecasted to record 17.8%, 16.2% and 13.9% CAGR in e-commerce sales from 2018 to 2023F, according to China E-business Research Centre and Statista and Transport Intelligence.
  • We factor in this acquisition and the Mapletree Waigaoqiao Logistics Park (MWLP) divestment in our model, and also lower our cost of equity assumption to 7.0% from 7.6%. This is to take into account Mapletree Logistics Trust’s solid capital recycling activities to unlock unitholder value, continued resilient operations and inclusion into the Straits Times Index which we believe would spur its trading liquidity further. Consequently, our fair value increases to S$1.59 (previously S$1.41). See Mapletree Logistics Trust Target Price.
  • However, we believe positives are more than priced in and valuations remain lofty, based on FY21F distribution yield of 4.7% (as at 20 Jan 2020 close). Maintain SELL.
  • See Mapletree Logistics Trust Analyst Reports.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2020-01-21
SGX Stock Analyst Report SELL MAINTAIN SELL 1.59 UP 1.410