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Mapletree North Asia Commercial Trust - OCBC Investment 2022-04-21: Time To Lock In Profits

MAPLETREE NORTH ASIA COMM TR (SGX:RW0U) | SGinvestors.io MAPLETREE NORTH ASIA COMM TR (SGX:RW0U)

Mapletree North Asia Commercial Trust - Time To Lock In Profits

  • Mapletree North Asia Commercial Trust's 2HFY22 distribution per unit (DPU) rose 2.8% y-o-y to S$0.03393.
  • Recovery stifled by fifth COVID-19 wave in Hong Kong.
  • Additional rental reliefs given in 4QFY22, but relaxation of social distancing measures to help.



Mapletree North Asia Commercial Trust's 2HFY22 results met our expectations

  • Mapletree North Asia Commercial Trust (SGX:RW0U) reported its 2HFY22 results which met our expectations. Gross revenue and net property income (NPI) rose 4.9% and 5.1% y-o-y to S$211.2m and S$160.1m, respectively, while DPU increased 2.8% y-o-y to S$0.03393. This included a one-off distribution top-up of S$3.5m from net insurance proceeds. Excluding this, we estimate that 2HFY22 DPU would instead have inched down 0.2% to S$0.03292.
  • For the full-year FY22, Mapletree North Asia Commercial Trust’s NPI jumped 10.2% to S$321.9m. DPU grew 10.4% to S$0.06819 and this formed 101.6% of our forecast.
  • The improvement in performance was driven largely by contribution from the acquisition of Hewlett-Packard Japan Headquarters Building and lower rental reliefs (FY22: S$14.7m versus FY21: S$49.8m). However, we note that the bulk of the rental assistance was given in 4QFY22 (~S$10m) due to the fifth COVID-19 wave in Hong Kong.
  • Although the number of daily infection cases has declined significantly, we believe the situation remains fluid, and future rental reliefs are possible should the caseloads increase again.


Mixed operating metrics

  • The fifth wave in Hong Kong resulted in Festival Walk’s tenants’ sales declining by 27.5% y-o-y in 4QFY22, although overall tenants’ sales and shopper traffic were up by 8.7% and 11.5%, respectively, for the full-year FY22. There were also some encouraging signs for Festival Walk’s rental reversions, which came in at -27% for FY22, but narrowed to -18% for 4QFY22 versus -32% in 9MFY22.
  • Management remains hopeful that rental reversions might bottom out ahead, given lower base effects and gradual loosening of social distancing measures in Hong Kong from 21 Apr 2022 (e.g. dine-in services extended from 6pm to 10pm; number of pax per table increased from two to four).
  • Rental reversions came in at -24% for Gateway Plaza but were positive for its other assets: Sandhill Plaza +5%, Japan Properties +1% and The Pinnacle Gangnam (TPG) +44%. TPG saw an acceleration in rental uplifts as average rental reversion was only +28% for 9MFY22.

Time to lock in gains






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2022-04-21
SGX Stock Analyst Report SELL DOWNGRADE HOLD 1.05 DOWN 1.060



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