MAPLETREE LOGISTICS TRUST (SGX:M44U)
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
- Mapletree Logistics Trust's gearing rose to 36.8% (from 34.7% as of end-Dec 2021) with completion of recent deals, while its AUM jumped 21% y-o-y to S$13.1b, helped by tighter cap rates in Australia (by 75-100bps), Hong Kong (10-60bps) and China (25- 60bps).
- We estimate a S$2.2b debt headroom (at 45% limit), as Mapletree Logistics Trust eyes acquisitions (likely sized at S$30-100m), while it looks to execute over S$500m of divestments in FY23.
- Management has guided for a S$197m development cost and an indicative 6.2% yield-on-cost for its 4th Singapore redevelopment project.
- See
Chua Su Tye
Maybank Research
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https://www.maybank-ke.com.sg/
2022-04-29
SGX Stock
Analyst Report
2.25
DOWN
2.350
