Mapletree Logistics Trust - Maybank Research 2022-04-29: Steady Delivery


Mapletree Logistics Trust - Steady Delivery

Stable quarter, lowering DPUs

  • Mapletree Logistics Trust (SGX:M44U)’s 4Q22 DPU rose 5% y-o-y and 3.8% q-o-q, with higher rental income and contributions from S$1.9b of acquisitions completed in FY22. Despite in-line results (consensus and our estimates), we pencil in slower growth assumptions for its China assets, and lower DPUs forecast for Mapletree Logistics Trust by 2-3%.
  • Mapletree Logistics Trust's DPU visibility remains high, underpinned by resilient occupancy from steady demand growth, and rental recovery in FY23E, for its well-placed logistics AUM.
  • We see upside from divestment gains, as management ups its pace of asset recycling against tightening cap rates.
  • Our DDM-based target price for Mapletree Logistics Trust is now S$2.25 (COE: 5.7%, LTG: 2.0%). Stay at BUY.

Occupancy lower in South Korea, Singapore, China

  • Mapletree Logistics Trust's portfolio occupancy fell to 96.7% in 4Q22 (from 97.8% in 3Q22), as higher occupancies in Japan and India were offset by dips in South Korea, China and Singapore.
  • Occupancy in Singapore would have risen to 99.0% (from 98.1%), with the exclusion of 51 Benoi Road, decanted for redevelopment. China’s occupancy was lower at 93.1% (from 95.9%) with 12 assets added in Jan 2022 which were 91.1% occupied, but is set to improve and stabilise in the coming quarters.
  • We think occupancies will stay resilient, but see near-term vacancy risk at its lower-tier cities, as pandemic-induced headwinds slow expansionary demand.

Strong leasing momentum, +2.9% rental reversion

  • Leasing activity remained strong at ~378k sqm (88% of all expiring leases and ~5% of its portfolio), renewed or replaced in 4Q22 (vs ~339k sqm in 3Q22). Single-asset expiries over FY23-24 are low at 2.3-5.3% while WALE (by NLA) was stable at 3.5 years (vs 3.6 years).
  • Portfolio rental reversion was stronger at +2.9% (vs +2.5% in 3Q22), led by leases in India (+5.0%), Vietnam (+4.0%), South Korea (+3.9%) and China (+3.1%).
  • We expect reversions to stay positive across its key growth markets, and to strengthen in Singapore (from +1.7%), Japan, and Australia.

Sound balance sheet, upping pace of divestments

Chua Su Tye Maybank Research | https://www.maybank-ke.com.sg/ 2022-04-29
SGX Stock Analyst Report BUY MAINTAIN BUY 2.25 DOWN 2.350