DBS analysts Derek Tan and Dale Lai have maintained their “buy” recommendation on Mapletree Industrial Trust (MINT) with an unchanged target price of $3.25, which assumes a target yield of close to 4.0%.
The report, dated September 15, came a day after the trust announced that it has acquired a data centre and office in Virginia in the US.
“We view that MINT has continued to deliver on its consistent strategy to deliver improved earnings visibility and stability to unitholders (weighted average lease expiry or WALE extended to 4.3 years vs 4.2 years currently),” says Tan and Lai.
The analysts also noted that despite the trust’s price to net asset value ratio (P/NAV) of 1.9x and forward yield, the analysts continue to see MINT pivoting its exposure towards data-centres in its portfolios, causing it to trade closer to its data-centre peer, Keppel DC REIT.
The latter is trading at a P/NAV of above 2.3x and has a yield of less than 3.0%.
Viewing MINT’s “certainty of growth” as a welcome trait, Tan and Lai says, they “like its improved earnings visibility of 4.0% compound annual growth rate (CAGR)”.
“[Its] capacity to further grow in the data centre space will keep valuations at a premium,” they add.
Tan and Lai add that the trust’s plans to enhance its land bank of older flatted factories into quality industrial properties will drive its gross floor area (GFA), drive medium-term growth in distributions and net asset value (NAV), which will keep valuations at a premium.
As at 1.17pm, shares in Mapletree Industrial Trust are trading 5 cents higher, or 1.6% up, at $3.27.
