MAPLETREE LOGISTICS TRUST (SGX:M44U)
Mapletree Logistics Trust - Reversions On The Rise
Another steady quarter
- Mapletree Logistics Trust (SGX:M44U)’s 3QFY22 (Oct 2021 to Dec 2021) DPU rose 5.8% y-o-y/ 0.6% q-o-q, helped by higher rental income and contributions from acquisitions in South Korea, Australia and Japan.
- We fine-tune our estimates to factor in its recent deals, as S$1.1b of assets in China, Vietnam, and Malaysia are set to expand AUM by ~10% to S$12.7b by end-Mar 2022E.
- Mapletree Logistics Trust's DPU visibility remains strong, underpinned by resilient occupancies from steady demand growth, and upside to rents in FY23E, for its well-placed logistics AUM. Management is eyeing further deal momentum to drive AUM growth, and upping its pace of divestments against tightening cap rates.
Better reversions, especially in Japan
- Mapletree Logistics Trust's 3QFY22 revenue and NPI rose 19.3% y-o-y and 17.4% y-o-y, with higher contributions from existing properties, acquisitions, and lower rental rebates. Portfolio occupancy was stable at 97.8%, as higher occupancies in Japan (from 99.7% to 99.9%), Hong Kong (99.7% to 99.9%), and South Korea (98.4% to 98.8%) offset a dip in Malaysia (100% to 99.1%).
- Its portfolio rental reversion was stronger at +2.5% (versus +2.4% in 2QFY22 and +2.2% in 1QFY22), led by leases in Vietnam (at +4.0%), Malaysia, South Korea and Japan (all +3.0%), Hong Kong (+2.9%) and China (+2.8%). Management believes its reversions in Japan, which rose from +1.5% in 2QFY3/22 could be sustained.
Strong leasing momentum
- Leasing activity remained strong at ~339k sqm (79% of all expiring leases and 5.0% of its portfolio) renewed or replaced during the quarter, versus ~541k sqm in 2QFY3/22 and ~391k sqm in 1QFY22.
- Single-asset expiries over FY23-24 are low at 2.4-6.0% while WALE (by NLA) was stable at 3.6 years (versus 3.7 years in 2QFY22). We expect occupancy to remain resilient, as demand continues to be led by e-commerce tenancies and 3PLs, and we see room for rental recovery to strengthen in coming quarters.
Sound balance sheet, upping pace of divestments
- Mapletree Logistics Trust's gearing fell to 34.7% from 38.4% as of end-Sep 2021, following the S$693m EFR and S$400m perps issuance, but will rise to 39.1% in 4Q22 with completion of recent deals.
- Mapletree Logistics Trust continues to eye accretive acquisitions, but sees challenges from rising cost of capital and tight cap rates for stabilised assets, and could focus on higher-yielding new developments with potentially better growth. Management expects to accelerate divestments in the coming months (at S$200-400m), and announce details for its 4th Singapore redevelopment project.
- See
- Our DDM-based target price for Mapletree Logistics Trust (COE: 5.7%, LTG: 2.0%) stays at S$2.35. BUY.
Chua Su Tye
Maybank Research
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https://www.maybank-ke.com.sg/
2022-01-30
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