Mapletree Logistics Trust - CGS-CIMB Research 2020-10-20: Strong Inorganic Growth


Mapletree Logistics Trust - Strong Inorganic Growth

Mapletree Logistics Trust's 2QFY21 results highlights

  • Mapletree Logistics Trust (SGX:M44U) reported 2QFY21 (Jul 20 to Sep 20) DPU of S$0.02055, +1.5% y-o-y, thanks to an 8.3%/6.2% y-o-y improvement in gross revenue and distributable income.
  • The better performance was due to higher contributions from existing properties, accretive acquisitions and income from the recently completed Ouluo P2 redevelopment in China.
  • Mapletree Logistics Trust's 1HFY21 DPU of S$0.041 was in line with our expectations at 49.2% of our FY21F forecast. See Mapletree Logistics Trust Dividend History.

Continue to enjoy positive rental reversion

  • Mapletree Logistics Trust’s portfolio saw a slight q-o-q uptick in occupancy to 97.5% as at end-2QFY21.
  • In terms of operations, there was positive rental reversions of 1.5% coming from HK SAR, Japan, China and Vietnam properties.
  • Mapletree Logistics Trust has a remaining 11.3% and 24.8% of rental income to be renewed in 2HFY21F and FY22F and management expects rental reversion to continue to stay in positive territory.
  • Mapletree Logistics Trust also completed the purchase of a newly built warehouse in Truganina, Australia for A$18.4m in Sep 2020.

Announced S$1,090.2m worth of acquisitions, more on the way

  • In addition, Mapletree Logistics Trust announced the proposed acquisition of the remaining 50% interest in 15 properties in China, 100% of 7 new properties in China, 1 Malaysia and 1 Vietnam property from its sponsor for a total acquisition cost of S$1,090.2m or at an implied net yield of 5.2%. The properties were acquired at 0.9-1.7% discount to 2 independent valuations.
  • The properties have a total c.1.22m sqm of net lettable area and committed occupancy of 94.7%. Post-acquisition, Mapletree Logistics Trust’s portfolio AUM would increase to S$10bn and enable the trust to further strengthen its connectivity across key logistics nodes and strengthen its supply chain resiliency as well as diversify its tenant base with an estimated 58% of its tenants involved in e-commerce.
  • Mapletree Logistics Trust intends to fund the net acquisition outlay of S$1,023.8m via S$300m of consideration units, equity fund raising of S$600m and debt of S$118.5m.
  • According to management, the transaction is expected to enhance proforma DPU and book NAV by 1.3%/6.6%, respectively, while lowering gearing from 39.5% to 37.1% as at Sep 2020. Furthermore, management guided that it is continuing to explore third-party acquisition opportunities, particularly in Australia, Korea, Malaysia, Vietnam and Japan.
  • We anticipate that Mapletree Logistics Trust would be able to conclude more acquisitions in the short-to medium-term. In addition, with greater debt headroom capacity, we believe any further new purchases would likely be accretive.

Maintain HOLD on Mapletree Logistics Trust with higher target price

LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2020-10-20
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.05 UP 1.890