Mapletree Logistics Trust - CGS-CIMB Research 2021-07-19: Strong Operating Metrics

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MAPLETREE LOGISTICS TRUST (SGX:M44U)

Mapletree Logistics Trust - Strong Operating Metrics

• Mapletree Logistics Trust's 1QFY22 DPU of S$0.02161 is within our expectations, at 25.1% of our FY22F forecast.
• Q-o-q improvement in portfolio occupancy amid positive rental reversions.
• Reiterate HOLD rating with an unchanged DDM-based target price of S$2.10.

Mapletree Logistics Trust's 1QFY22 results highlights

• Mapletree Logistics Trust (SGX:M44U) reported a 5.7% y-o-y rise in 1QFY22 (Apr 2021 to Jun 2021) DPU of S$0.02161, thanks to a 23.7% y-o-y improvement in gross revenue due to higher contributions from existing properties, accretive acquisitions and income from the recently completed redevelopment of Mapletree Ouluo Logistics Park P2 in China and maiden contributions from India assets, partly moderated by the depreciation in HK$ and ¥ and lower divestment gains.

Maintain high portfolio occupancy

• Mapletree Logistics Trust’s portfolio saw a slight q-o-q hike in occupancy to 97.8% as at end-1QFY22, lifted by higher occupancy in South Korea and China. There were positive rental reversions of 2.2% coming mainly from Singapore, HK SAR and Vietnam properties.
• Mapletree Logistics Trust has a remaining 21.9% and 25.9% of rental income to be renewed for the remainder of FY22F and in FY23F. Management remains fairly upbeat on rental reversion prospects given that demand for logistics warehouse space continues to be relatively robust and will focus on maintaining stable portfolio occupancy rates and prioritising tenant retention.

Acquisitions and asset enhancement activities to drive growth

• In 1QFY22, Mapletree Logistics Trust proposed the acquisition of a temperature-controlled warehouse in Singapore for S$24.5m. The purchase is subject to approval from JTC Corporation and exercise of Option to Purchase. Mapletree Logistics Trust is in talks with an international third-party logistics firm to lease the property as an anchor tenant. The property is expected to have a stabilised property yield of 6.2%.
• Mapletree Logistics Trust’s gearing stands at 38.2% at 1QFY22, 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 FY22 while all-in interest cost stands at 2.2% with 75% of its debt hedged into fixed rates, as at end-1QFY22.
• Looking ahead, in addition to potentially undertaking asset enhancement opportunities in Singapore, management continues to look for accretive acquisition opportunities.

Reiterate HOLD rating

• We leave our FY22-24F DPU estimates for Mapletree Logistics Trust unchanged post results. Our DDM-based target price for Mapletree Logistics Trust remains unchanged at S$2.10.
• See
  • Mapletree Logistics Trust's Share Price,
  • Mapletree Logistics Trust's Target Price,
  • Mapletree Logistics Trust's Analyst Reports,
  • Mapletree Logistics Trust's Dividend History,
  • Mapletree Logistics Trust's Announcements,
  • Mapletree Logistics Trust's Latest News.
• While we like Mapletree Logistics Trust for its pan-Asian logistics asset focus, FY22F dividend yield of ~4.1% is on the lower end vs other industrial REITs.
• Upside risk: more accretive acquisitions.
• Downside risk: slow macro outlook that would hamper rental growth outlook.

LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-07-19

SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.100 SAME 2.100