Mapletree Commercial Trust - OCBC Investment 2021-01-28: VivoCity Still Packed With Pizzazz


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

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-01-28
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.18 UP 1.970