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


Mapletree Logistics Trust - Stable Quarter, Slower Visibility

Results in line, stay at HOLD

  • 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.

Better rental reversions in M’sia, Vietnam and HK

  • 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.

Lower demand growth visibility in SG, M’sia

  • 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%.

Slower momentum on capital-recycling efforts

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