Mapletree Commercial Trust - CGS-CIMB Research 2021-04-26: Underpinned By Resilient Portfolio


Mapletree Commercial Trust - Underpinned By Resilient Portfolio

  • Mapletree Commercial Trust’s FY3/21 DPU of 9.49 cents (+18.6% y-o-y) came in above expectations.
  • VivoCity’s tenant sales continued to recover while office/business park portfolio remained stable.
  • Reiterate HOLD. We believe market has priced in its resilient portfolio.

Timely acquisition of MBC II, offset weakness from COVID-19

  • Mapletree Commercial Trust (SGX:N2IU)’s FY3/21 revenue and NPI of S479m (-0.8% y-o-y) and S$377m (-0.2% y-o-y), respectively, were relatively flat y-o-y, thanks to the full-year contribution from MBC II (acquired on 1 Nov 2019). Excluding the effect of acquisition, FY21 revenue and NPI declined ~12% y-o-y, mainly due to rental rebates given to retail tenants, weaker occupancy rates and rental reversions.
  • Mapletree Commercial Trust's FY21 DPU of 9.49 cents (+18.6% y-o-y), which included the release of S$28m retained income from 4QFY20, came in above our expectations at 107% of FY21F DPU. It would have been in line at 98% if we exclude the release of retained income.
  • On a q-o-q basis, NPI declined 3.2% due to seasonality. 4QFY21 NPI grew 2.6% y-o-y mainly due to fewer rental rebates. Average rental rebate was ~0.2 months for both 3QFY21 and 4QFY21.

Encouraging tenant sales recovery at VivoCity

  • VivoCity’s occupancy rate held up in 4QFY21 at ~97% with high committed occupancy of 99.1%. Retail rental reversion declined 9.6% in FY21 (vs -12% to -13% in 9MFY21) which was largely within expectations vs our forecast of -8%.
  • FY21 tenant sales while declined 23.3% y-o-y on a full-year basis, 4QFY21 tenant sales achieved 92% of the levels in 4QFY19 (pre-COVID-19 level) which was encouraging.
  • Shopper traffic in FY21/4QFY21 continued to lag at 50% of FY20 and 60% of 4QFY19.

Overall stable performance from office/business park segment

  • The actual occupancy rate of most of its office/business park assets (ex MBC I) remained stable q-o-q. While MBC I experienced a 5%-pt decline in occupancy to 90.2% q-o-q, committed occupancy remained relatively high at 94.6% (vs. 95.2% as at Dec 2020). Office/business park portfolio’s committed occupancy remained high at 95% to 100% but is expected to decline slightly due to a lease termination at mTower ahead of commencement.
  • No impact for now as the pre-term compensation provides > 16 months of lead time for backfilling. Office/business park portfolio reported +0.4% rental reversion in FY21 with MBC’s leases renewed at positive mid-single digit reversions.

Reiterate HOLD with a higher target price of S$2.32

EING Kar Mei CFA CGS-CIMB Research | LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2021-04-26
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.32 UP 2.260