Analysts are keeping a positive stance on Mapletree Logistics Trust (MLT) following its latest results announcement on Jan 25. The trust reported distribution per unit (DPU) of 2.065 cents for the 3QFY2020/2021 ended December over an enlarged unit base of 4.28 billion following the equity fund raising completed during the quarter. The DPU represents a 1.0% y-o-y increase from 2.044 cents in 3QFY2019/2020.
Amount distributable to unitholders for the quarter rose 10.2% y-o-y to $84.4 million, as it includes the partial distribution of the gains from the divestments of Mapletree Waigaoqiao Logistics Park. The sum also includes the gains from the divestments of the five properties in Japan as well as from 7 Tai Seng Drive. Revenue for the quarter came in at $139.9 million, 15.5% higher y-o-y.
See: Mapletree Logistics Trust reports slightly higher 3Q20/21 DPU of 2.065 cents on enlarged unit base
With that, OCBC Investment Research is keeping its “buy” recommendation on MLT with an increased fair value estimate of $2.17 from $2.12 previously, as the results were in-line with expectations.
In its Jan 26 report, the OCBC research team says, “Although MLT will not be immune to a weaker macroeconomic backdrop, we expect it to remain relatively more resilient vis-à-vis its peers, and also see MLT as a key beneficiary of the structural shift towards more robust e-commerce growth trends ahead.”
“However, given the rotation play to value and laggards, MLT’s share price has recently underperformed and we view this as a buying opportunity for investors with a medium to longer-term horizon,” it adds.
The research team also likes MLT for its diversified logistics portfolio spread across key markets in Asia such as Singapore, Hong Kong, Japan, Australia, Vietnam and China. Management also has strong execution capabilities and its portfolio capital recycling strategy has also resulted in net divestment gains being distributed to unitholders.
Looking ahead, MLT said that it was seeking further new acquisition opportunities, and this would be supported by its healthy aggregate leverage of 36.8% (as at Dec 31, 2020). South Korea and India are its likely near-term destinations.
Meanwhile, Maybank Kim Eng shares similar sentiments as it also continues to rate MLT “buy” with an unchanged target price of $2.40, while keeping the stock among its top S-REIT picks.
“MLT delivered a stable 3QFY2021 as DPU rose 1.0% y-o-y due to higher rental income and earlier acquisitions offsetting its divestments and provisions for rental relief. Our forecasts are unchanged and we expect its occupancies to remain resilient due to steady demand growth,” says analyst Chua Su Tye.
During the quarter, leasing activity for MLT remained strong with 266,000 sqm or about 40% of its portfolio renewed or replaced, from 326,000 sqm in the previous quarter. Single-asset expiries over FY21-22 remained low at 2.2% and its WALE was stable at 3.7 years. Demand continues to be driven by e-commerce tenancies and 3PLs.
“In Singapore, management is seeing an uptick in last-mile activity, which has offset slower demand for general cargo. The supply outlook remains constructive and we see positive demand-led fundamentals supporting rental recovery,” says Chua.
CGS-CIMB Research is however less bullish as it keeps its “hold” call on MLT but with a higher target price of $2.10 from $2.05 previously.
“We like MLT for its pan-Asian logistics asset focus but at a projected approximately 8.2% total return, our rating remains a ‘hold’,” says analyst Lock Mun Yee.
MLT’s portfolio saw a slight q-o-q dip in occupancy to 97.1% as at end-3QFY2021, dragged by lower occupancy in HK and Japan, partly offset by higher take-up in China and South Korea. In terms of operations, there was positive rental reversions of 1.6% coming from HK, Malaysia, China and Vietnam properties. The trust has a remaining 6% and 26.5% of rental income to be renewed in 4QFY2021 and FY2022 and management expects rental reversion to continue to remain relatively stable.
Looking ahead, management guided that it will continue to explore third-party acquisition opportunities, particularly in South Korea and India. Given its expanded portfolio base, it could also evaluate opportunities to acquire pre-stabilised properties that could provide higher returns.
“We anticipate that the trust would be able to conclude more acquisitions in the short- to medium-term. In addition, with greater debt headroom capacity, we believe any further new purchases would likely be accretive,” says Lock.
As at 11.05am, units in MLT are trading at $2.00 or 1.6 times FY2021 NAV with a DPU yield of 4.1%, according to OCBC’s estimates.
