MAPLETREE LOGISTICS TRUST (SGX:M44U)
CAPITALAND COMMERCIAL TRUST (SGX:C61U)
Singapore REITs - MLT 3QFY20 In-line, CCT 4Q19 In-line
- Mapletree Logistics Trust (SGX:M44U) reported healthy growth in DPU of 2.1% y-o-y. Portfolio occupancy improved 0.2ppt q-o-q to 97.7%. Rental reversion moderated from 1.8% in 1HFY19 to 1.2% in 3QFY19.
- CapitaLand Commercial Trust (SGX:C61U) reported healthy growth in DPU of 2.7% y-o-y. It maintained stable portfolio occupancy at 98% while achieving positive rental reversions for Six Battery Road, CapitaGreen and Raffles City Tower.
- Maintain HOLD on Mapletree Logistics Trust and maintain BUY on CapitaLand Commercial Trust (Target: S$2.30).
- Maintain OVERWEIGHT on the sector.
Mapletree Logistics Trust 3QFY20 Results
- Results in-line. Mapletree Logistics Trust posted a 3QFY20 DPU of 2.044 S cents (+2.1% y-o-y), bringing 9MFY20 DPU to 6.094 S cents (+3.0% y-o-y). Gross revenue and net property income increased by 0.3% and 3.9% y-o-y respectively in 3QFY20, driven by higher contributions from existing properties, partially offset by the divestment of five Japan properties in 1QFY20 and the impact of a weaker Australian Dollar, Korean Won and Chinese Renminbi.
- Portfolio occupancy improved slightly to 97.7% in 3QFY20 (+0.2ppt q-o-q) due to higher occupancy in Singapore (+0.7ppt q-o-q), and was partially offset by lower occupancies in South Korea (-1.7ppt q-o-q) and China (-0.4ppt q-o-q). Japan, Australia, Malaysia, and Vietnam maintained occupancy at 100%.
- Moderation in rental reversions. For leases renewed during the quarter, rentals were on average 1.2% higher than preceding rental rates (1QFY20: +1.8%, 2QFY20: +1.8%). The higher reversion was attributable mainly to Hong Kong (+3.5%), China (+1.1%), Malaysia (+2.3%), South Korea (+0.6%), Singapore (+0.5%) and Vietnam (+3.2%).
- Active portfolio rejuvenation. During the quarter, Mapletree Logistics Trust completed the divestment of Mapletree Waigaoqiao Logistics Park in China, and also completed the acquisitions of seven high-quality logistics facilities in Malaysia (one property), Vietnam (two properties) and China (50% interest in four properties in tier-2 cities) in Dec 19, which will make full-quarter contributions in 4QFY20.
- Gearing increased marginally to 37.5% in 3QFY20 (vs 37.0% in 2QFY20). The total debt outstanding increased by S$199m, mainly due to a S$234m loan drawn to fund the acquisitions of the seven logistics properties and asset enhancement initiatives. This loan was partially offset by S$35m due to lower net translated currency debt (due to depreciation of JPY, HK$ and AU$). Post quarter-end, gearing was reduced to 37.1% due to the settlement of loans from net divestment proceeds.
- Continuing to re-cycle logistic properties. Customers remain cautious about renewals and expansion, with some looking at consolidating their operations to improve cost efficiency. Management has identified sponsor pipeline with 4.6m sf of logistic space in China, Malaysia and Vietnam (completed: 1.9m sf, development projects: 2.7m sf). Mapletree Logistics Trust has also earmarked logistics properties with older specifications worth S$500m for potential divestment.
- Maintain HOLD and target price of S$1.65 based on DDM (required rate of return: 6.0%, terminal growth: 2.0%). Entry price is S$1.51.
- See Mapletree Logistics Trust Share Price; Mapletree Logistics Trust Target Price; Mapletree Logistics Trust Analyst Reports; Mapletree Logistics Trust Dividend History; Mapletree Logistics Trust Announcements; Mapletree Logistics Trust Latest News.
CapitaLand Commercial Trust 4Q19 Results
- Results in line. CapitaLand Commercial Trust posted a 4Q19 DPU of 2.28 S cents (+2.7% y-o-y). Gross revenue and net property income (NPI) for 4Q19 increased by 8.9% and 3.3% respectively. The improved performance was largely attributed to the acquisition of the Main Airport Center and higher contribution from 21 Collyer Quay and Capital Tower. Adjusted net asset value per unit of S$1.82 was up 1.1% y-o-y.
- Active leasing and asset management. CapitaLand Commercial Trust leased 398,000sf through renewal and new leases. New leases made up 20% of the total leases with demand mainly from companies in the financial services, energy, commodities, maritime & logistics, manufacturing and distribution sectors. One-third of the leases expiring in 2020 have been completed to-date.
- Portfolio occupancy was maintained at 98% (Singapore: 98.6%, Germany: 95.9%). CapitaLand Commercial Trust achieved positive rental reversions with committed rents for Six Battery Road at S$11.90-14.00 (expired rents: S$11.67), CapitaGreen at S$11.00-12.60 (expired rents: S$9.83) and Raffles City Tower at S$9.20-11.00 (expired rents: S$9.07).
- CapitaSpring, an integrated development expected to be completed in 1H21, has increased its committed occupancy to 34.8% as at Dec 19 (previous: 31%).
- Asset enhancement initiatives. Asset enhancement works for Six Battery Road commenced in 1Q20 and is expected to complete in 3Q21 (main office tower will remain operational). Contribution from the upgraded space at Six Battery Road will resume progressively in 4Q20. 21 Collyer Quay, previously known as HSBC Building, is on track to start upgrading from 2Q20 and the new lease will commence in 2Q21.
- Maintain BUY. Our target price of S$2.30 is based on DDM (required rate of return: 5.5%, rowth: 1.5%).
- See Capitaland Commercial Trust Share Price; Capitaland Commercial Trust Target Price; Capitaland Commercial Trust Analyst Reports; Capitaland Commercial Trust Dividend History; Capitaland Commercial Trust Announcements; Capitaland Commercial Trust Latest News.
Jonathan KOH CFA
UOB Kay Hian Research
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Peihao LOKE
UOB Kay Hian
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https://research.uobkayhian.com/
2020-01-22
SGX Stock
Analyst Report
1.65
UP
1.390
2.300
SAME
2.300
