Mapletree Logistics Trust - OCBC Investment 2022-04-29: Good Performance

MAPLETREE LOGISTICS TRUST (SGX:M44U)

Mapletree Logistics Trust - Good Performance

Mapletree Logistics Trust's 4QFY22 (Jan 2022 to Mar 2022) distribution per unit (DPU) rose 5.0% y-o-y to S$0.02268.
Positive 4QFY22 rental reversions of 2.9% although occupancy inched down.
Higher aggregate leverage ratio of 36.8%, notwithstanding solid revaluations gains.

Mapletree Logistics Trust (SGX:M44U)’s 4QFY22 results met our expectations, with gross revenue and net property income (NPI) increasing 16.5% and 14.9% y-o-y to S$182.9m and S$157.1m, respectively. DPU rose 5.0% y-o-y to S$0.02268. If we exclude distribution from divestment gains, Mapletree Logistics Trust’s adjusted DPU would have increased 8.7% y-o-y to S$0.0223.
For FY22, Mapletree Logistics Trust’s NPI jumped 18.6% to S$592.1m, while DPU grew 5.5% to S$0.08787 and was 1.8% above our forecast.
Looking ahead, Mapletree Logistics Trust expects minimal impact from rising utility costs, given that its landlord’s share is for the common areas and that forms ~2-3% of its overall property operating expenses.
Mapletree Logistics Trust has also achieved a 31% increase in its solar generating capacity to 13.8 Megawatt peak (MWp) in FY22 and its longer-term target is to double its solar energy generating capacity by 2030 as compared to its FY21 baseline.

Mapletree Logistics Trust achieved overall portfolio rental reversions of 2.9% in 4QFY22, led by India (+5%), Vietnam (+4%), South Korea (+3.9%) and China (+3.1%).
Mapletree Logistics Trust's portfolio occupancy declined slightly by 1.1 percentage points (ppt) quarter-on-quarter (QoQ) to 96.7% due to higher vacancies in Singapore, South Korea and China. Full occupancy was achieved in India, Vietnam and Australia.
Management highlighted that while it remained largely sanguine on its outlook, it was more cautious on China given the current COVID-19 situation.
Performance has been mixed, with Tier-1 cities still benefiting from tight supply and a strong consumer base, thus supporting high occupancy rates of ~95%. On the other hand, the Tier-2 and lower tier cities have experienced softer sentiment, with tenants less aggressive in their expansion plans. Occupancy rates in these cities are expected to hover around the low- 90% level, but positive rental reversions are still expected over the next 12 months.
Minimal provisions for rental rebates (~S$400k) have been made in 4QFY22 notwithstanding the resurgence in COVID-19 cases in China.

Mapletree Logistics Trust’s aggregate leverage ratio increased 2.1 ppt q-o-q to 36.8%, with 79% of its borrowings hedged. It recorded strong portfolio revaluation gains of S$572m, which was in turn driven by cap rates compression across most markets: Australia, China, Hong Kong, India, Japan, South Korea and Vietnam.
Mapletree Logistics Trust’s aggregate leverage would likely inch up to ~37.5% post-completion of its announced acquisitions after 4QFY22. Management also said it was looking at potentially ~S$500m of divestments, and will keep to its past practice of distributing the divestment gains to unitholders over 4-12 quarters.
After adjustments, including raising our risk-free rate assumption from 1.9% to 2.5%, our fair value estimate declines from S$2.05 to S$2.00.
See

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2022-04-29

SGX Stock Analyst Report BUY MAINTAIN BUY 2.00 DOWN 2.050