Mapletree Industrial Trust - OCBC Investment 2020-07-22: Positive Transition Offset By Near-term Headwinds

MAPLETREE INDUSTRIAL TRUST (SGX:ME8U) | SGinvestors.io MAPLETREE INDUSTRIAL TRUST (SGX:ME8U)

Mapletree Industrial Trust - Positive Transition Offset By Near-term Headwinds

  • Mapletree Industrial Trust's 1QFY21 DPU fell 7.4% y-o-y due to income retention.
  • Rental reversions mostly negative.
  • Unchanged Fair Value of S$3.25.



Mapletree Industrial Trust's 1QFY21 results in-line with our expectations

  • Mapletree Industrial Trust (SGX:ME8U) reported its 1QFY21 results which met our expectations. Gross revenue fell 0.5% y-o-y to S$99.1m but NPI rose 0.9% to S$78.7m due to a higher NPI margin of 79.4% (+1.1 ppt y-o-y).
  • Amount available for distribution rose 11.6% y-o-y to S$70.6m but DPU dipped 7.4% to 2.87 S cents. This constituted 23.5% of our FY21 forecast and the decline was attributed to the retention of S$7.1m (~0.32 S cents per unit) of tax-exempt income (distributions relating to joint ventures) in light of the Covid-19 pandemic. If this income had not been withheld, DPU would instead have increased 2.9% y-o-y.


Headwinds from Singapore operations

  • Operationally, headwinds from Mapletree Industrial Trust’s Singapore operations were apparent, given the fact that ~55% of its Singapore portfolio (or 45% of overall portfolio) by gross rental income are SME tenants. About 90% of Mapletree Industrial Trust’s tenants (by gross rental revenue) have continued or resumed their business operations. However, management estimated that ~S$20m of rental reliefs would need to be extended to its tenants. We had already baked this in our forecasts previously.
  • Rental arrears of more than one month stood at 1.0% of the previous 12 month’s gross revenue, as at 30 Jun 2020. This was higher than the 0.2% recorded in 4QFY20 and Mapletree Industrial Trust is working with these tenants on rental restructuring plans.
  • Portfolio occupancy came down slightly by 0.4 ppt q-o-q to 91.1% due to Singapore as its North American occupancy was unchanged at 98.7%.
  • Rental reversions for renewal leases came in at -3.1% for Stack-Up/Ramp-up Buildings, -1.9% for Business Park Buildings, -1.7% for Hi-Tech Buildings, -1.2% for Flatted Factories and the only positive was for Light Industrial Buildings (+2.5%). This is in-line with management’s -2% to -3% guidance previously.


Positive transition towards a hi-tech/data centre industrial REIT






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2020-07-22
SGX Stock Analyst Report BUY MAINTAIN BUY 3.250 SAME 3.250



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