Mapletree Logistics Trust - Maybank Kim Eng 2020-04-26: Stable Quarter, Slower Visibility

MAPLETREE LOGISTICS TRUST (SGX:M44U)

Mapletree Logistics Trust - Stable Quarter, Slower Visibility

Mapletree Logistics Trust (SGX:M44U) saw another stable quarter in its 4Q20 as DPU rose 1.2% y-o-y with higher rental income and earlier acquisitions offsetting its divestments. FY20 DPU was in line with our estimates.
Management remains cautious on lower demand visibility with heightened government-led measures (in SG and M’sia) and expects a slower acquisition growth profile in FY21.

We see low downside risk on its diversified AUM and well-sited logistics assets, but also limited DPU growth upside to its 5.0% div yield valuation and DDM-based SGD1.85 Target Price (COE: 6.5%, LTG: 2.0%).
Our top industrial-sector pick remains the business-park-focused Ascendas REIT (SGX:A17U) (BUY, Target Price SGD3.35, see report: Ascendas REIT - Maybank Kim Eng 2020-02-03: Diversification & Growth), which trades at a higher 6.5% yield with stronger DPU growth prospects and the balance sheet for acquisitions.
Stay at HOLD.

Mapletree Logistics Trust's revenue and NPI rose 5.5% y-o-y and 9.3% y-o-y with higher contributions from existing properties, acquisitions in Malaysia, Vietnam, S.Korea and Japan during the year, which offset six property divestments.
Portfolio occupancy improved from 97.7% to 98.0%, as better occupancies in HK (99.2% to 99.9%) and China (95.0% to 96.3%) offset weaker occupancy in S.Korea (96.4% to 96.0%). Rental reversion was at +2.0% (versus +1.2% in 3Q20) led by positive reversions in Malaysia (+4.5%), Vietnam (+3.9%), and HK (+3.7%).
Mapletree Logistics Trust remains optimistic on the logistics market in Japan, HK, Vietnam and S.Korea.

Mapletree Logistics Trust's WALE is lower at 4.3 years (from 4.4 years in 3Q20), but single-user asset expiries remain low at 2.4-3.1% over the next two years. SMEs, contributing 20-25% of portfolio revenue, are concentrated in Singapore (30-35%) and S.Korea (50-60%).
According to management, all tenants at its properties in HK and Japan are operational, while 5% of its Singapore tenancies are impacted by the Covid-19 outbreak. They have estimated retail, hospitality and travel tenancies at 10% of overall revenue while e-commerce operators contribute 30%.

Mapletree Logistics Trust's AUM has increased 10.5% y-o-y to SGD8.9b, backed by SGD806m in deals and +1.5% in capital appreciation. Cap rates compressed in Japan (down 50bp), Australia (50-75bp), S.Korea (10-25bp), Vietnam (25-50bp), and its China JV properties (100bp), and mostly attributed to its asset locations.
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.

Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-04-26

SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.850 SAME 1.850