Mapletree Industrial Trust - CGS-CIMB Research 2021-01-29: Uptick In Singapore Portfolio Performance


Mapletree Industrial Trust - Uptick In Singapore Portfolio Performance

  • Mapletree Industrial Trust's 3Q/9MFY21 DPU of 3.28/9.25 cents is broadly within our expectations, at 26.8%/75.7% of our FY21F forecast.
  • Singapore portfolio occupancy rose to 92.2% while average rents grew 3.9% q-o-q.
  • Reiterate HOLD with a DDM-based target price of S$3.03.

Mapletree Industrial Trust's 3QFY21 results highlights

  • Mapletree Industrial Trust (SGX:ME8U) reported a 20.5%/20.8% y-o-y rise in 3QFY3/21 revenue/NPI to S$123.7m/S$98.9m respectively, due to the consolidation of the 14 US data centres (DC), partly offset by the impact of rental rebates extended to tenants and loss of income from redevelopment of Kolam Ayer 2 (KA2).
  • Mapletree Industrial Trust's 3QFY21 DPU of 3.28 cents, +3.8% y-o-y, represents a ~95% payout ratio. 9MFY21 DPU of 9.25 cents is broadly within our expectations at 76% of our FY21F forecast.

Higher Singapore portfolio occupancy

  • Mapletree Industrial Trust's portfolio occupancy ticked up slightly q-o-q to 93.1% at end-3Q, led by a 0.7% pt pick-up in Singapore portfolio occupancy to 92.2% while average Singapore rents increased 3.9% q-o-q, thanks to higher rents signed for new leases within the hi-tech segment.
  • While rent arrears remain stable q-o-q at 1.4% of the previous 12 month’s revenue, Mapletree Industrial Trust guided that it expects to give additional tenant rent reliefs in 4QFY21, on top of the S$9m of rent relief it has extended year-to-date.
  • Looking ahead, Mapletree Industrial Trust has 2.6%/16.1% of its gross rental income to be renewed in 4QFY21F and FY22F, respectively. Management expects operating conditions to remain challenging and drag on rents to persist over the next few quarters.

Inorganic growth from acquisitions and redevelopment activities

  • In terms of inorganic growth, Mapletree Industrial Trust announced the proposed acquisition of a DC and office in Virginia, US for US$200.6m-262.1m. According to management, the deal is expected to complete in 1QCY21F. In addition, divestment of 26A Ayer Rajah Crescent for S$125m is slated for completion in 2QCY21.
  • Meanwhile, the planned redevelopment of KA2 into a new hi-tech industrial precinct commenced construction in late Nov 2020 and completion scheduled for 2H22F. Mapletree Industrial Trust guided that the total development cost for KA2 has increased to S$300m (from S$263m previously) due to higher construction costs. Nonetheless, we believe benefits from future-proofing its portfolio remain intact and management maintains its target to achieve at least 7% yield on cost from this redevelopment exercise.
  • With gearing of 37.3% at end-3Q, Mapletree Industrial Trust is well positioned to continue to tap into inorganic growth opportunities, in our view.

Reiterate HOLD rating

LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-01-29
SGX Stock Analyst Report HOLD MAINTAIN HOLD 3.030 SAME 3.030