Mapletree Logistics Trust - DBS Research 2020-04-08: Essential & Resilient

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MAPLETREE LOGISTICS TRUST (SGX:M44U)

Mapletree Logistics Trust - Essential & Resilient

• Value emerging after recent price decline.
• Operations should remain relatively resilient in the midst of COVID-19 outbreak in its key markets.
• Acquisition momentum unlikely to be derailed in the medium term; confident that acquisitions will feature sometime in 2020.
• BUY with Target Price of S$1.85 as we adjust our cost of equity assumptions.

A safe harbour, upgrade to BUY, Target Price S$1.85.

• We see value emerging for Mapletree Logistics Trust (SGX:M44U) after its recent share price correction, bringing valuations to a more palatable 1.3x P/NAV, yield of 5.2%.
• We remain comfortable that Mapletree Logistics Trust’s pure logistics exposure is least impacted by the COVID-19 outbreak and Singapore’s tightening restrictions on workspaces (logistics is less impacted) will imply that its earnings profile will remain more stable than peers.

Where we differ: COVID-19 may impact operations albeit marginally.

• We understand that the COVID-19 outbreak has indirectly impacted operations for some of its tenants, especially in the consumer space in China, Singapore and Hong Kong.
• While we anticipate some rent relief to tenants, the gradual relaxation of restrictions in China implies that the initial worries of a widespread rebate is unlikely to materialise. Our earnings estimates are moderated by -4 % to conservatively assume negative reversions (SG/HK) and slower acquisition assumptions.

Structural growth drivers in place; moderate acquisitions assumptions.

• We retain our optimism that Mapletree Logistics Trust can deliver acquisitions, but likely towards the end of 2HFY21 onwards. We moderate our forecast to S$350m worth of acquisitions in FY21 funded by 40% debt/60% equity, and this has not been priced in by consensus at this point. Opportunities will likely come from its Sponsor which has an extensive pipeline of properties.

Valuation:

• We upgrade our recommendation to BUY with a revised Target Price of S$1.85.
• 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.

Derek TAN DBS Group Research | Singapore Research Team DBS Research | https://www.dbsvickers.com/ 2020-04-08

SGX Stock Analyst Report BUY UPGRADE HOLD 1.85 DOWN 1.900