MAPLETREE COMMERCIAL TRUST (SGX:N2IU)
Mapletree Commercial Trust - VivoCity Still Packed With Pizzazz
- Mapletree Commercial Trust's 3QFY21 gross revenue fell 1.0% y-o-y but NPI grew 1.1%.
- Actual portfolio occupancy declined to 94.7% but committed occupancy higher at 98.1%.
- Increase fair value estimate to S$2.18 on signs of recovery.
Mapletree Commercial Trust's 3QFY21 business updates showed signs of recovery
- Mapletree Commercial Trust (SGX:N2IU) provided a business update for 3QFY21 (Oct 2020 to Dec 2020). Gross revenue fell 1.0% year-on-year to S$130.0m but NPI rose 1.1% to S$104.4m. This was driven largely by contribution from Mapletree Business City II which was acquired in Nov 2019, but partially offset by rental rebates for eligible tenants.
- That said, we note that the level of rental rebates and waivers given to tenants has tapered down to ~0.2 months in 3QFY21, as compared to approximately 0.7 months in 2QFY21 and 2.8 months in 1QFY21.
- For 9MFY21, Mapletree Commercial Trust’s gross revenue and NPI slipped 1.9% and 1.2% y-o-y to S$348.7m and S$275.9m, respectively, with the latter forming 72.2% of our FY21 forecast. We consider this to be tracking within our expectations.
Actual occupancy declined slightly but tenants’ sales recovering gradually
- Mapletree Commercial Trust’s portfolio occupancy fell slightly by 0.6 percentage points (ppt) q-o-q to 94.7%, due mainly to higher vacancy at Mapletree Business City I. However, committed portfolio occupancy was higher at 98.1% as there were higher take-ups across its entire portfolio, besides the properties which are already fully occupied.
- Shopper traffic and tenants’ sales at VivoCity dipped 40% and 14% y-o-y to 8.5m and S$232.2m in 3QFY21, respectively. However, this was a huge improvement as compared to the respective 65% and 42% y-o-y declines registered in 2QFY21. We opine that this is an encouraging showing given the absence of tourists to the mall.
- Furthermore, adidas Originals, one of the existing tenants at VivoCity, doubled its footprint to ~6k sq ft on Basement 1, thus creating its largest flagship store in Southeast Asia. There is work in progress to introduce another adidas flagship store on Level 1 by 1QFY22. There were also several other new F&B tenants and concepts which were introduced to VivoCity in 3QFY21. This reflects the allure and strong positioning of the mall, in our view.
Balance sheet remains healthy
- In terms of financial position, Mapletree Commercial Trust’s gearing ratio remains healthy at 34.0%, comparable to end- 1HFY21 level (33.8%).
- 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.
- We keep our financial forecasts but bump up our fair value estimate from S$1.97 to S$2.18 as we roll forward our valuations and also ascribe a lower cost of equity assumption of 6.1% (previously 6.5%). We believe this is justifiable given more given more visible signs of a recovery in the global economy and retail sector, coupled with continued resiliency for Mapletree Commercial Trust’s business park portfolio.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2021-01-28
SGX Stock
Analyst Report
2.18
UP
1.970
