Mapletree Logistics Trust 2QFY22 - UOB Kay Hian 2021-10-26: Stepping Up The Pace Of Acquisitions In 2HFY22


Mapletree Logistics Trust 2QFY22 - Stepping Up The Pace Of Acquisitions In 2HFY22

  • Mapletree Logistics Trust (SGX:M44U)’s 2QFY22 results were within our expectations with portfolio occupancy stable at 97.8% and positive rental reversion of +2.4%. Mapletree Logistics Trust completed four acquisitions worth only S$351m in 1HFY22 but the pace of acquisitions is expected to pick up substantially in 2HFY22.
  • Mapletree Logistics Trust could acquire logistics properties in China from sponsor Mapletree Investments and in Japan from third-party vendors. However, distribution yield remains unattractive at 4.3%. Maintain HOLD.

Mapletree Logistics Trust's 1HFY22 Results

  • Mapletree Logistics Trust (MLT) reported DPU of S$0.02173 (+5.7% y-o-y) for 2QFY22, which is in line with expectations. 2QFY22 and 2QFY21 DPU included divestment gains of S$1.8m and S$4.7m respectively. Excluding these divestment gains, 2QFY22 DPU would have increased 10.4% y-o-y.
  • Growth from existing properties and accretive acquisitions. Gross revenue and net property income (NPI) grew 25.2% and 21.5% y-o-y respectively in 2QFY22 due to higher revenue from existing properties, accretive acquisitions completed in FY21 and the redevelopment of Ouluo Logistics Park Phase 2 in Shanghai completed in 1QFY21.
  • Mapletree Logistics Trust achieved positive rental reversion of +2.4% for 541,370sqm of new and renewed leases in 2QFY22, a slight pick-up compared with 2.2% in 1QFY22. The positive reversions were contributed by Malaysia (+3%), Vietnam (+3%), Hong Kong (+2.6%), China (+2.5%) and South Korea (+2%). Retention rate was healthy at 91%.
  • Portfolio occupancy stable at 97.8% in 2QFY22. Occupancy for Singapore improved 0.5ppt q-o-q to 98.1% due to improvements at 76 Pioneer Road and 10 Changi South Street 3. Occupancy for China eased 0.6ppt q-o-q to 95.9% due to weakness at Shenyang, Tianjin and Chengdu. Occupancies in Australia, Malaysia and Vietnam stood at 100%.
  • Prudent capital management. Aggregate leverage was unchanged at 38.2% in 2QFY22. Average cost of debt was maintained at 2.2%. Mapletree Logistics Trust has sufficient committed credit facilities of S$674m to refinance debts of S$110m due in 2HFY22. Its average duration of debt is healthy at 3.6 years.

Pursuing strategic acquisitions.

  • Mapletree Logistics Trust’s tenants operate with minimum will evaluate the feasibility of two redevelopment projects:
    1. 9 Changi South Street 2 (recently acquired) and 15 Changi South Street 2 could be amalgamated and redeveloped into a larger logistics property.
    2. Redevelopment of 51 Benoi Road into a six-storey ramp-up logistics property with modern specifications.

Mapletree Logistics Trust - Valuation & Recommendation

Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2021-10-26
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.080 SAME 2.080