Mapletree Logistics Trust - Maybank Kim Eng 2020-06-14: Delivering The Goods


Mapletree Logistics Trust - Delivering The Goods

Rising Pan-Asian platform, further rerating ahead

  • Mapletree Logistics Trust (SGX:M44U) ranks well against its global and regional peers on scale and trading liquidity, while its growing APAC-focused AUM is well-positioned in capturing the sector’s multiple structural growth themes. Acquisitions, backed by a strong sponsor, have boosted its AUM to SGD8.9b, while deepening its footprint in the region’s high-growth markets.
  • Occupancies should remain resilient on steady demand growth and a well-diversified portfolio, while rent growth across its China, HK SAR, Japan and Vietnam assets could outperform against tight market supply.
  • Demand tailwinds - higher inventory levels from disrupted supply chains and the pandemic-induced e-commerce surge - should mitigate near-term tenancy risks.
  • We raised Mapletree Logistics Trust's FY20 DPUs by 2-3%. Our DDM-based Target Price (COE: 5.9%, LTG: 2.0%) rises further to SGD2.10.

Portfolio rejuvenation lifting yields

  • Its proactive capital recycling initiatives have delivered returns – three Singapore redevelopment projects with 1.8-4.1x GFA expansions upon completion, and more recently, its China Ouluo property, sited close to Shanghai’s Pudong airport, which received a 2.4x GFA boost in Mar 2020.
  • Meanwhile, divestments since 2015 have delivered > SGD95m in gains and capital distributions. Steady demand growth and supply constraints for modern facilities in its key markets could support further redevelopment opportunities and divestment efforts.

Clear acquisition growth strategy

  • Momentum on its deals - focused on properties in close proximity to key transportation nodes and population centres - has gained pace in recent years.
  • The SGD834.8m Tsing Yi warehouse (Oct 2017) is HK-SAR’s newest modern facility and supported by a 5.7% NPI yield. A 50% interest in 11 Grade A logistics properties in China valued at SGD575.3m doubled its China NLA while raising the market’s e-commerce revenue contribution from 18% to 42% (Jun 2018).
  • The SGD405.3m portfolio in China, Malaysia, and Vietnam (in Nov 2019) helped deepen Mapletree Logistics Trust's core markets, while the recent SGD276.0m Kobe acquisition has strengthened its network of high-specification modern assets in Japan, as the market’s e-commerce size is set to rise at ~10% CAGR from 2019-23.

Higher leverage limit supports further growth

Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-06-14
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