Analysts have largely kept their calls and target prices unchanged following Mapletree Commercial Trust’s (MCT) 1QFY2021/2022 ended June results, which were released late last week.
See also: Mapletree Commercial Trust posts 23% higher NPI of $96.9 mil for 1QFY21/22
UOB Kay Hian was the sole analyst with an adjustment in target price, revising it downwards to $2.48 from $2.50 previously while keeping its “buy” call.
CGS-CIMB Research and OCBC Investment Research both kept their “hold” ratings and target prices unchanged.
In a July 26 research note, UOB Kay Hian analyst Jonathan Koh highlights that MCT faces “a temporary setback” pursuant to the Phase 2 (Heightened Alert) period from July 22 to August 18.
The way he sees it, social distancing measures could be “substantially” eased by October, in tandem with the Singapore government’s 75% vaccination target.
To that end, he has assumed that MCT would provide rental rebates of another 0.6 months of fixed rents to eligible retail tenants in 2QFY2021/2022. His tweaked assumption results in a lower DPU forecast for the year by 6.5%, thus underpinning his lower target price.
Koh remains bullish on MCT’s longer-term prospects in view of the government’s plans to develop the Greater Southern Waterfront (GSW) and rejuvenate Sentosa Island and Pulau Brani.
Pointing out that MCT has five properties - accounting for 91.4% of its portfolio valuation - located in the HarbourFront area, which is at the heart of the GSW, he anticipates MCT to benefit as the plans get gradually rolled out.
CGS-CIMB analysts Eing Kar Mei and Lock Mun Yee remain neutral on MCT despite anticipating that it will see more stable income compared to peers amidst the weaker operating environment.
“[We] retain our target price and Hold call as the stock is now trading at c.4.5% yield, which we believe prices in its income stability,” they say in a July 26 research note.
They note that MCT’s 1QFY2021/2022 net property income of $96.9 million came in line with their expectations, driven by lower rental rebates and pre-term lease compensation.
For OCBC’s research team, MCT’s 1Q performance was also in line with their expectations. The team also commended MCT’s move to support its tenants amidst the tightened Covid-19 measures. “We believe MCT has always been one of the most proactive retail REITs in supporting its retail tenants, and this was once again illustrated by the ~0.6 months of rental rebates/waivers extended to eligible tenants in 1QFY22 (~4.4 months were given in FY21),” they remark.
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To that end, the team views that despite the announcement by the Ministry of Finance on July 23 that it is looking to require sharing of rental obligations between the government, landlords and qualifying tenants, MCT's outlay will likely not increase significantly given its existing support measures.
“We lower our FY2022 DPU forecast by 0.8% to factor in more rental rebates. However, our fair value estimate remains unchanged at $2.20,” the team adds.
As at 2.36pm, units in MCT are trading 1 cent or 0.47% lower at $2.11.
Photo: The Edge Singapore
