MAPLETREE LOGISTICS TRUST (SGX:M44U)
Mapletree Logistics Trust 4QFY21 - Maintaining & Sustaining Pace Of Growth For Acquisitions
- Mapletree Logistics Trust reported good 4QFY21 results with DPU growth of 5.5% y-o-y. It achieved positive rental reversion of +2.4%. Portfolio occupancy improved 0.4ppt q-o-q to 97.5%. NAV per unit increased 9.9% y-o-y to S$1.33.
- Mapletree Logistics Trust could tap on its sponsor pipeline to acquire logistics properties in China, Malaysia and Vietnam. It could also look to acquire logistics properties in Australia and South Korea from third-party vendors.
- Distribution yield is unattractive at 4.3%. Maintain HOLD. Target price: S$2.08.
Mapletree Logistics Trust's Results
- Mapletree Logistics Trust (SGX:M44U) reported DPU of 2.161 cents (+5.5% y-o-y) for 4QFY21, which is in line with expectations.
Growth from existing properties and accretive acquisitions.
- Gross revenue and net property income (NPI) grew 22.6% and 19.1% y-o-y respectively in 4QFY21 due to higher revenue from existing properties, acquisitions completed in FY20 and FY21 and the redevelopment of Ouluo Logistics Park Phase 2 in Shanghai completed in 1QFY21.
- Mapletree Logistics Trust completed the acquisition of 18 modern logistics properties across six countries in Australia, China, India, Japan, South Korea and Vietnam and the remaining 50% stake for 15 properties in China in FY21, which are worth a total of S$1.6b.
Mapletree Logistics Trust achieved positive rental reversion
- Mapletree Logistics Trust achieved positive rental reversion of +2.4% in 4QFY21, driven by Hong Kong (+3.2%), Japan (+5.7%), Malaysia (+3.3%) and Vietnam (+3.8%). Portfolio occupancy improved 0.4ppt q-o-q to 97.5%. Occupancies for Hong Kong and China improved by 1.1ppt and 0.8ppt q-o-q respectively to 99.8% and 95.3%. Occupancies remained at 100% in Australia, Malaysia and Vietnam.
Uplift from revaluation gains.
- Mapletree Logistics Trust recognised fair value gain from investment properties of S$179m. On a portfolio basis, the capitalisation rate has compressed from 5.3% to 5.2%. On a same store basis, valuations have improved 2.4% driven by Hong Kong, South Korea and Japan (1.7% after accounting for depreciation of Hong Kong dollar and Japanese yen). NAV per unit increased 9.9% y-o-y to S$1.33.
Successfully completed equity fund-raising.
- Mapletree Logistics Trust completed the acquisition of nine properties in China, Malaysia and Vietnam and the remaining 50% stake in 15 properties in China in 3QFY21. It raised S$644m through private placement and preferential offering in Nov 20 to finance the acquisitions.
Minimal refinancing risks.
- Aggregate leverage has increased 1.6ppt q-o-q to 38.4%. Average cost of debts remains low at 2.2%. Mapletree Logistics Trust has sufficient committed credit facilities of S$668m to refinance debts of S$161m due in FY22.
STOCK IMPACT
Growth from third-party logistics (3PL) and e-commerce.
- Leasing demand for Mapletree Logistics Trust’s logistics space is expected to remain resilient.
- In Singapore, the leasing market has stabilised as new supply tapers. Demand is also boosted by e-commerce growth and stockpiling requirements.
- In Hong Kong, the vacancy rate is expected to remain low due to absence of new supply in 2021.
- In China, new supply of logistics space is expected to be absorbed due to economic recovery. Growth in China is powered by structural trends, such as growth in e-commerce and economic strategy to promote dual circulation and domestic consumption.
- Logistics properties in Japan is underpinned by long leases.
- The four markets account for 78% of Mapletree Logistics Trust’s revenue.
Expansion in South Korea.
- Mapletree Logistics Trust acquired five high specifications freehold logistics properties in Yongin-Incheon, South Korea, for KRW280b (S$334.8m) in Feb 21. The acquisition provides NPI yield of 4.5%. It increases GFA in South Korea by 40%. The five properties span across freehold land of 148,800sqm and GFA of 150,000sqm.
- Yongin-Incheon is well sought-after by 3PL and e-commerce players due to its proximity to Seoul. Tenants engaged in e-fulfilment activities, such as Dongsan Logistics and TE Logis supporting e-commerce players Coupang and e-Bay respectively, accounted for 45% of revenue.
Maiden acquisition in India.
- Mapletree Logistics Trust acquired two logistics properties with NLA of 87,256sqm in Pune, Maharashtra, India for INR4,550m (S$84.2m) in Mar 21. The acquisition provides NPI yield of 7.4%. India benefits from growth in domestic consumption supported by a rising middle class and growth in manufacturing due to its “China Plus” supply chain diversification strategy. Tenants are predominantly multinational companies, such as Kawasaki and Hyundai.
Working on more acquisitions.
- Mapletree Logistics Trust could tap on its sponsor pipeline for logistics properties in China, Malaysia and Vietnam. It will also explore acquiring logistics properties from third-party vendors in Australia and South Korea.
Keen interest to invest in logistics properties.
- The 20:80 JV between ESR Cayman and sovereign wealth fund GIC has agreed to acquire a portfolio of 45 logistics properties in Australia held by Blackstone’s Milestone Logistics. The assets with land area of 3.6m sqm and gross leasable area of 1.4m sqm are located in Adelaide, Brisbane, Melbourne, Perth and Sydney. They are valued at A$3.8b (S$3.7b) and provide initial yield of 4.5% and long weighted average lease expiry of 6.9 years. This is the largest real estate transaction in Australia over the past five years.
EARNINGS REVISION/RISK
- Our existing DPU forecast for Mapletree Logistics Trust remains largely unchanged.
VALUATION/RECOMMENDATION
- Maintain HOLD on Mapletree Logistics Trust with target price at S$2.08. Our valuation is based on the dividend discount model (COE: 6.0%, terminal growth: 2.0%).
- See
SHARE PRICE CATALYST
- Accretive acquisitions to rejuvenate and reposition towards modern specifications logistics facilities, domestic consumption and e-commerce.
Jonathan KOH CFA
UOB Kay Hian Research
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https://research.uobkayhian.com/
2021-04-23
SGX Stock
Analyst Report
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