Mapletree Logistics Trust - CGS-CIMB Research 2020-07-21: Resilient Results

MAPLETREE LOGISTICS TRUST (SGX:M44U)

Mapletree Logistics Trust - Resilient Results

Mapletree Logistics Trust's 1QFY3/21 DPU of 2.05 Scts within our expectations, at 24.5% of our FY21F.
Driving growth through organic rental reversions and inorganic opportunities.
Reiterate HOLD with higher DDM-based Target Price of S$1.89.

Mapletree Logistics Trust (SGX:M44U) reported stronger 1QFY3/21 gross revenue of S$132.4m (+10.5% y-o-y) and distributable income of S$77.8m (+5.7% y-o-y), thanks to organic rental growth, contributions from new acquisitions, and lower property expenses, albeit partly offset by rental rebates granted to eligible tenants and divestment of six properties in FY20.
Mapletree Logistics Trust's 1Q21 DPU of 2.045Scts was 1% higher y-o-y due to an enlarged units base.

Portfolio occupancy was fairly stable at 97.2% as at 1QFY21. Mapletree Logistics Trust renewed/leased c.362k sq m of lettable area during the quarter and achieved an average rental reversion of +1.9% across its geographic footprint, with stronger uplifts coming from China, HK, Malaysia and Vietnam.
Mapletree Logistics Trust shared that most of its tenants, except small tenants accounting for 1.3% of its gross revenue, have resumed operations. While Mapletree Logistics Trust’s portfolio benefited from higher e-commerce activity and structural supply chain diversification into Southeast Asia, it continues to monitor the impact of Covid-19 on the warehouse leasing environment. It has 15.6% of income to be re-contracted for the rest of FY21F.

Mapletree Logistics Trust’s aggregate leverage stood at 39.6% at end-1QFY21 while weighted average interest cost declined to 2.3%. It also indicated it has committed credit facilities of over S$530m.
In Jun 2020, Mapletree Logistics Trust purchased a logistics property in Brisbane, Australia for A$21.25m, to be fully funded by debt. The property is 100% leased to Decina, Australia’s largest specialist bath, space and shower manufacturer, for 10 years, with annual rental escalation. The deal is slated to be concluded in 3QFY21.
Meanwhile, Mapletree Logistics Trust continues to explore portfolio rejuvenation possibilities for its existing portfolio, and highlighted that a number of its properties in Singapore, Malaysia, Korea and Japan, totalling c.S$500m, have asset enhancement potential. The potential positive impact have not been reflected in our current estimates. In addition, it continues to explore new acquisition opportunities.

We raised our FY21-23F DPU by 0.1-3.1% to factor in contributions from its recent Australian acquisition and lower interest cost. Our DDM-based Target Price for Mapletree Logistics Trust rises to S$1.86 on higher DPU projections as well as to reflect S$350m worth of new acquisitions premised on a 40/60 debt/equity funding. We keep our HOLD rating.
See Mapletree Logistics Trust Share Price; Mapletree Logistics Trust Target Price; Mapletree Logistics Trust Analyst Reports; Mapletree Logistics Trust Dividend History; Mapletree Logistics Trust Announcements; Mapletree Logistics Trust Latest News.
We anticipate the potential asset enhancement initiatives (AEIs) within its existing portfolio would likely catalyse Mapletree Logistics Trust's share price in the medium term. In addition, Mapletree Logistics Trust continues to offer strong income visibility as 78% of its distributable income is hedged/sourced in S$.
Downside risks includes delay in undertaking AEIs and negative rental reversions.

LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2020-07-21

SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.89 UP 1.630