Mapletree Commercial Trust - Maybank Kim Eng 2020-07-24: Easing Into A Reopening

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MAPLETREE COMMERCIAL TRUST (SGX:N2IU)

Mapletree Commercial Trust - Easing Into A Reopening

MCT's 1Q21 In line, maintain BUY

• Mapletree Commercial Trust (SGX:N2IU) saw a weak 1Q21 with its revenue and NPI impacted by Singapore’s eight-week ‘circuit breaker’ and the continued closure of most trades during the first phase of its re-opening from 2-18 Jun 2020. The results were operationally in-line with both consensus and our estimates and we maintain our forecasts and SGD2.15 DDM-based Target Price (COE: 5.9%, 2.0%).
• Mapletree Commercial Trust's balance sheet remains strong with an estimated SGD SGD1.5-3.0b in debt headroom at 45-50% leverage limit. Valuations are undemanding at 5.2% FY22 yield, given improved DPU visibility following its MBC II acquisition, and added traction from VivoCity’s recovery into the coming quarters.

Weaker retail performance, lift from MBC II

• Mapletree Commercial Trust's revenue fell 10.5% y-o-y and 21.2% q-o-q in 1Q21 while NPI dipped 10.7% y-o-y and 20.0% q-o-q, primarily due to COVID-19 rental rebates granted to eligible retail tenants during the quarter. This was mitigated by the contribution from MBC II, which was acquired in Nov 2019.
• Mapletree Commercial Trust's portfolio occupancy was stable at 97.1%, with a slight dip at VivoCity (from 99.6% to 98.3%) offset by an improvement at Mapletree Anson (97.8% to 100%). Its portfolio committed occupancy remains high at 98.2%, with MBC I, Mapletree Anson and MLHF fully occupied as of end-Jun 2020.

Higher rebates for VivoCity tenants

• Revenue and NPI at VivoCity declined 56.7% y-o-y and 59.9% y-o-y, after falling 16.9% y-o-y and 20.5% y-o-y in its 4Q20, while its shopper traffic and tenant sales plunged 78.5% y-o-y and 63.4% y-o-y with the mandated closure of the majority of its retail outlets and restrictions in non-essential activities during the ‘circuit breaker’ months.
• Mapletree Commercial Trust has topped up its tenant support package by SGD6m (from the initial SGD29m), as it raised the rental rebate from 50% to 100% of fixed rent, which would allow its eligible tenants to gain ~4.0 months in fixed-rent waivers.

MBC II has improved DPU growth visibility

• Mapletree Commercial Trust's balance sheet remains strong; 33.7% leverage (was 33.3% at end-Mar 2020) and 4.1x interest cover. Its AUM profile has improved following the MBC II deal, as retail contribution has fallen to 36.6% (from 45.5%).
• See Mapletree Commercial Trust Share Price; Mapletree Commercial Trust Target Price; Mapletree Commercial Trust Analyst Reports; Mapletree Commercial Trust Dividend History; Mapletree Commercial Trust Announcements; Mapletree Commercial Trust Latest News.

Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-07-24

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