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Mapletree Industrial Trust - Maybank Kim Eng 2020-10-28: Adding Resiliency

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

Mapletree Industrial Trust - Adding Resiliency


2Q21 in line, growth from US data centres

  • Mapletree Industrial Trust (SGX:ME8U)’s 2Q21 DPU, down 1.0% y-o-y, rose 8.0% q-o-q with its (overseas) tax-exempt income fully-distributed on the back of a more stable outlook.
  • While Singapore occupancy improved, reversion was at -3.3% y-o-y, with rent recovery likely only from 2H 2021. We see rental relief rising further in 2H21 to support its SME tenancies, provided for by its SGD20.0m tenant assistance package.
  • The results were in line (with consensus and MKE); we maintain our forecasts and DDM-based target price (COE: 5.6%, LTG: 2.0%).
  • We continue to favour Mapletree Industrial Trust's positive growth fundamentals and more resilient portfolio, with DPU visibility strengthened by its rising hi-tech asset investments and overseas diversification. BUY.





SG occupancy up, tenant retention high

  • Revenue rose 1.5% y-o-y and 4.3% q-o-q while NPI increased by 2.0% y-o-y and 3.8% q-o-q with the consolidation of its 14 US data centres (previously 40% equity accounted), which were partly offset by rental relief and income loss from redevelopment of the Koyam Ayer 2 (KA2) Cluster.
  • Mapletree Industrial Trust's portfolio occupancy improved from 91.1% to 92.3%; they rose or were stable at all segments except for data centres (99.2% to 98.7%) and stack-up/ramp-up buildings (93.7% to 93.5%). Excluding KA2, flatted factories occupancy was lower (88.8% to 88.4%) with demand weak for multi-tenanted space.


Rent reversions weak, further relief in 2H21

  • Gross rents fell 2.4% q-o-q to SGD2.03 psfpm (vs -1.4% q-o-q in 1Q21) as all segments except for its data centres recorded lower rents on the back of rental rebates.
  • Mapletree Industrial Trust's flatted factories saw a -2.3% rental reversion, and management expects negative reversions (at -5.0%) to persist till at least 2H 2021 given the high 54% of Singapore SME tenancies, which remain pressured by Covid headwinds. SGD7.1m in rental relief has been extended, with SGD12.9m expected to be recognised in 2H21.

Data centre contributions to rise further






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-10-28
SGX Stock Analyst Report BUY MAINTAIN BUY 3.400 SAME 3.400



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