Mapletree Logistics Trust - Maybank Research 2022-01-30: Reversions On The Rise


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

Chua Su Tye Maybank Research | https://www.maybank-ke.com.sg/ 2022-01-30
SGX Stock Analyst Report BUY MAINTAIN BUY 2.350 SAME 2.350