Mapletree Logistics Trust - CGS-CIMB Research 2021-04-21: Sound Operations

MAPLETREE LOGISTICS TRUST (SGX:M44U)

Mapletree Logistics Trust - Sound Operations

Mapletree Logistics Trust (SGX:M44U)'s 4Q and FY21 DPU of S$0.02161/S$0.08326 were in line with our projections.
Accretive acquisitions and stable operations underpinned DPU growth.
Reiterate HOLD rating with an unchanged DDM-based target price of S$2.10.

Mapletree Logistics Trust (SGX:M44U) reported a 5.5% y-o-y rise in 4QFY21 DPU of S$0.02161, thanks to a 22.6% y-o-y improvement in gross revenue due to higher contributions from existing properties, accretive acquisitions and income from the recently completed Ouluo P2 redevelopment in China, partly offset by rental rebates granted to tenants impacted by COVID-19 and recognition of allowance of doubtful receivables.
Mapletree Logistics Trust's FY21 (April 2020 to March 2021) DPU of S$0.08326 was broadly in line with our expectations at 99.6% of our FY21F forecast. FY21 BV/unit increased 9.9% to S$1.33 due mainly to higher valuations in HK SAR, Japan and South Korea asset values, partly offset by lower valuations in Singapore.

Mapletree Logistics Trust’s portfolio saw a slight q-o-q hike in occupancy to 97.5% as at end-FY21, lifted by higher occupancy in HK SAR, South Korea and China. There were also positive rental reversions of 2.4% (vs. 3QFY21 of 1.6%) coming from HK SAR, Malaysia, Japan and Vietnam properties.
Mapletree Logistics Trust has a remaining 26.4% and 24.7% of rental income to be renewed in FY22-23F and management remains fairly upbeat on rental reversion prospects given that demand for logistics warehouse space continues to be relatively robust.

In 4QFY21, Mapletree Logistics Trust completed the acquisition of 5 properties in South Korea and another 2 assets in India, at a total purchase consideration of S$419m. These properties generate NPI yields of 4.5-7.4% and will be DPU accretive given that they are fully funded by debt.
Mapletree Logistics Trust’s gearing stands at 38.4% at end FY3/21, providing the trust with good debt headroom to pursue inorganic expansion opportunities.
Mapletree Logistics Trust has only 4% of its total debt due to be refinanced in FY3/22 while all-in interest cost stands at 2.2% with 75% of its debt hedged into fixed rates, as at end-FY21.
Looking ahead, in addition to acquisition growth, management indicated that it could also undertake asset enhancement opportunities, potentially in Singapore and China.

We tweak our FY22-23F DPU estimates for Mapletree Logistics Trust up by 1.92-1.94% as we fine-tune our projections post results, as well as factor in new contributions from the South Korea and India acquisitions. Our DDM-based target price for Mapletree Logistics Trust remains unchanged at S$2.10.
While we like Mapletree Logistics Trust for its pan-Asian logistics asset focus, FY22F dividend yield of ~4.4% is on the lower end vs other industrial REITs.
See Mapletree Logistics Trust Share Price; Mapletree Logistics Trust Target Price; Mapletree Logistics Trust Analyst Reports; Mapletree Logistics Trust Dividend History; Mapletree Logistics Trust Announcements; Mapletree Logistics Trust Latest News.
Upside risk: more accretive acquisitions.
Downside risk: slow macro that would hamper rental growth outlook.

LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-04-21

SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.100 SAME 2.100