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Mapletree Industrial Trust - Maybank Research 2022-07-26: Data-driven Growth

MAPLETREE INDUSTRIAL TRUST (SGX:ME8U) | SGinvestors.io MAPLETREE INDUSTRIAL TRUST (SGX:ME8U)

Mapletree Industrial Trust - Data-driven Growth


Strong 1Q23, maintain BUY

  • Mapletree Industrial Trust (SGX:ME8U)’s 1Q23 DPU rose ~4% y-o-y/flat q-o-q, driven by rising US data centre contributions, now at ~51% of AUM. The performance was in line with consensus and slightly above our estimates; we raise DPUs by 1-2% on stronger occupancies and rents, while our DDM-based target price for Mapletree Industrial Trust stays at S$3.00 (COE: 6.6%, LTG: 2.0%).
  • Growth headwinds from inflationary pressures and rising interest rates are partly offset by retained capital distributions, and a strong balance sheet.
  • Mapletree Industrial Trust's valuations are undemanding at ~5% yield, backed by improving fundamentals from better occupancies, recovering industrial rents, and higher DPU visibility from its rising data centre tenancies. BUY.



Better occupancies and reversions

  • Mapletree Industrial Trust's portfolio occupancy increased to 95.3% in 1Q23 (from 94.0% in 4Q22), with improvements across all property segments in Singapore (with occupancy rising from 94.4% to 96.0%) and the US (from 93.3% to 94.0% data nosnippet).
  • While gross rents in Singapore (at S$2.13 psfpm) were flat q-o-q and y-o-y (vs +3.9% y-o-y in 4Q22), rental reversion was better at +2.9% (vs +1.1% in 4Q22) from hi-tech (+2.0%), flatted factories (+2.2%), business park (+6.4%), as well as stack-up/ramp-up buildings (+0.8%), and set to strengthen into FY23.


Higher costs partly mitigated

  • Mapletree Industrial Trust’s electricity hedges for its Singapore multi-tenanted properties had fallen off at end-May 2022, and management had earlier indicated that costs could rise by S$10-12m for FY23E, or 2-3% of DPU.
  • We had pencilled in weaker net property income (NPI) margins into the coming quarters on the back of the cost escalation, even as higher service charges (which were raised 10% for air-conditioning) at the business park and hi-tech buildings from Jul for all its ongoing leases could help mitigate the cost pressure.

DPU cushioned from rising rates






Chua Su Tye Maybank Research | https://www.maybank-ke.com.sg/ 2022-07-26
SGX Stock Analyst Report BUY MAINTAIN BUY 3.00 DOWN 3.100



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