Mapletree Commercial Trust - CGS-CIMB Research 2020-07-23: Impacted By VivoCity


Mapletree Commercial Trust - Impacted By VivoCity

  • Mapletree Commercial Trust’s 1QFY3/21 NPI was a slight miss at 20% of our full-year forecast.
  • Revenue was mainly impacted by rental waivers.
  • Maintain HOLD, with a lower Target Price of S$1.88.

Mapletree Commercial Trust's 1QFY21 NPI came in slightly lower than expectation

  • Mapletree Commercial Trust (SGX:N2IU)’s 1QFY21 revenue declined 10.5% while NPI declined 10.7%, mainly due to rental rebates granted to eligible tenants impacted by Covid-19. Mapletree Commercial Trust has committed ~4 months of rental rebates (include property tax rebates and cash grant from the government), the highest quantum among the retail REITs so far.
  • The decline was partially mitigated by contribution from MBC II which it acquired in Nov 2019. Excluding MBC II, revenue would have declined ~29% y-o-y.
  • Mapletree Commercial Trust's 1QFY21 NPI of S$78.9m accounted for 20% of our FY20F; this is slightly below our expectation after taking account of the rental rebates.

VivoCity impacted by rental waivers

  • VivoCity's 1QFY21 revenue declined 56.7% y-o-y, mainly due to rental rebates given to tenants as well as slightly lower occupancy rate of 98.3% at end-Jun vs. 99.1% last year. Rental reversion was not disclosed.
  • Shopper traffic plunged 78.5% y-o-y to 2.8m while tenant sales declined 63.4% y-o-y to S$76.5m in 1QFY20 which was not surprising as the mall was largely closed during the circuit breaker period. However, since its reopening, VivoCity has been receiving encouraging traffic recovery.
  • Management expects VivoCity to take some time to get back to pre-Covid-19 levels as the majority of Singaporeans are still working from home while its borders remain close.

Office/business park segment saw mixed performance

  • Within the office/business park segment, Mapletree Business City I (MBC I), PSA Building (PSAB) and Merrill Lynch Harbour Front (MLHF) reported y-o-y revenue decline of 3.1%,15.7% and 2.4% to S$31.8m, S$10.8m and S$4.9m respectively due to lower y-o-y occupancy rates. MBC I and PSAB experienced a y-o-y occupancy decline of 2.5% pts and 1.9% pts to 96.4% and 88.7% respectively.
  • Committed occupancy, however, remained relatively high at 98.7% and 90.4% respectively. MLHF remained 100% occupied. The only office building which reported positive revenue was Mapletree Ason (MA). MA had been a weak asset but it achieved 100% occupancy rate in Jun vs. 92.7% a year ago despite Covid-19.

Maintain HOLD, with a lower DDM-based of S$1.88

EING Kar Mei CFA CGS-CIMB Research | LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2020-07-23
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.88 DOWN 1.940