Mapletree Commercial Trust - OCBC Investment 2020-02-03: A Solid Quarter

MAPLETREE COMMERCIAL TRUST (SGX:N2IU)

Mapletree Commercial Trust - A Solid Quarter

MAPLETREE COMMERCIAL TRUST (SGX:N2IU)’s recent 3QFY20 results came in slightly above our expectations due to earlier-than-expected completion of the Mapletree Business City (Phase2) (MBC II) acquisition.
Gross revenue and NPI jumped 16.7% and 17.6% y-o-y to S$131.3m and S$103.3m, respectively. This was driven by contribution from MBC II and stronger performance across its other assets, with the exception of Mapletree Anson.
DPU grew 5.6% y-o-y to 2.46 S cents.
On a 9MFY20 basis, Mapletree Commercial Trust’s NPI increased 7.4% to S$279.4m, while DPU of 7.09 S cents represented a growth of 3.8% and formed 76.4% of our original FY20 forecast.

Operationally, Mapletree Commercial Trust achieved overall portfolio rental reversions of +5.0%. This was driven largely by the retail segment, which registered a rental uplift of 6.7%. Rental reversions for the Office/Business Park segment were +0.7%. Rental reversions at VivoCity would likely moderate ahead as the strong rental uplift was driven by an anchor tenant renewal.
Overall portfolio physical occupancy improved from 96.1% (as at 30 Sep 2019) to 98.3%, as there was a jump at Mapletree Anson (+21.9 ppt q-o-q) since the previously pre-committed spaces commenced their operations.
Overall portfolio committed occupancy was 98.9%, relatively stable from the previous quarter.
For the space to be vacated by PSA at PSA Building, management highlighted that 60% of it will be leased to WeWork, which is still experiencing firm leasing demand in Singapore.
Shopper traffic and tenant sales at VivoCity fell 2.2% and 0.5% y-o-y, respectively, in 9MFY20. However, there was already a sequential improvement for the latter (+14.8% q-o-q and +2.0% y-o-y) in 3QFY20 as NTUC FairPrice has contributed a full quarter.

We raise our FY20 DPU forecast by 2.3% as we factor in the actual acquisition completion date of MBC II. Our FY21 DPU forecast remains stable (+0.1%), such that we now expect a decent 5.0% growth in DPU for FY21F.
As we also lower our cost of equity assumption from 6.2% to 5.9% to align with our recent changes for CapitaLand Mall Trust (SGX:C38U) and Frasers Centrepoint Trust (SGX:J69U), our fair value is increased from S$2.28 to S$2.44.
See Mapletree Commercial Trust Share Price; Mapletree Commercial Trust Target Price; Mapletree Commercial Trust Analyst Reports; Mapletree Commercial Trust Dividend History; Mapletree Commercial Trust Announcements; Mapletree Commercial Trust Latest News.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2020-02-03

SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.44 UP 2.280