Analysts are keeping a positive stance on Mapletree Industrial Trust (MINT) despite the trust recording a 7.4% y-o-y drop in its latest 1Q21 DPU to 2.87 cents.
This was despite distributable income for the quarter increasing by 11.6% y-o-y to $70.6 million. But DPU for the quarter decreased due to the withholding of tax-exempt income of $7.1 million relating to the distributions declared by joint ventures in 1Q21. Had the tax-exempt income distributions not been withheld, the DPU for 1Q21 would have been 3.19 cents.
See: Mapletree Industrial Trust posts 7.4% y-o-y fall in 1Q20 DPU to 2.87 cents
Maybank Kim Eng is keeping its “buy” call on MINT with an increased target price of $3.30 from $2.95 previously.
In its July 22 report, analyst Chua Su Tye says, “We continue to favour MINT’s positive growth fundamentals and its more resilient portfolio - DPU visibility has been strengthened by its rising hi-tech asset investments and overseas diversification.”
MINT has reclassified its data centres as a standalone property segment. This has increased to 31.6% of its asset under management (AUM), and is expected to rise with the acquisition of a 60% interest in its first US data centre asset portfolio.
According to Chua, the assets are well-placed and should help deepen its market penetration, underpinned by strong demand growth, with outsourced operational needs (in m sf) set to rise at a 9.5% CAGR from 2018-24E with a 14.0% CAGR rise in cloud computing revenues.
Additionally, MINT has recently completed a $410.0 million equity fund raising (EFR) and it has strengthened its balance sheet, while liquidity has improved further following its inclusion into the benchmark FSSTI on 22 Jun.
On the back of the new units from the EFR, along with the remaining 60% interest in its US data centre deal, Chua’s FY22-23 DPU forecast were lifted by 3-4%.
UOB Kay Hian also continues to rate MINT a “buy” with a target price of $3.10 from $3.08 previously.
More than 70% of MINT’s tenants (by gross rental revenue) in Singapore provide essential services, which remained open during the circuit breaker period. 90% of MINT’s tenants have continued or resumed their business operations. All 27 data centres in North America, deemed essential services by the authorities in the US and Canada, remained open.
Meanwhile, management estimated that rental relief (excluding property tax rebates and cash grants from the government) amounted to about $20 million, comprising the Covid-19 Assistance and Relief Programme of $13.7 million and mandated rental relief for SMEs under the Covid-19 (Temporary Measures) (Amendment) Act 2020 of $6.3 million.
55% of MINT’s Singapore portfolio by gross rental income (or 45% of overall portfolio) is of SME tenants, And 105 tenants, accounting for 4.5% of gross rental income, have requested rental deferrals.
So far, rental collection has improved from 94% to 97% (normalised level: 98%). Arrears of more than one month are at about 1%.
“We have assumed that MINT withhold tax exempt income of another $6.3 million in 2QFY21,” says lead analyst Jonathan Koh in a July 23 report.
Furthermore, MINT has commenced redevelopment of the Kolam Ayer 2 Flatted Factory into a high-tech industrial precinct, which will raise its plot ratio to 2.5 times from 1.5 times, thereby increasing its GFA by 71% to 865,600 sq ft.
Management has secured pre-commitment from an anchor tenant (global medical device company headquartered in Germany) for 24.4% of the enlarged GFA, while 74 of the 108 existing tenants at Kolam Ayer 2 have committed to new leases at alternative MINT clusters.
This redevelopment is expected to complete in 2H22.
Similarly, DBS is also upbeat on the stock with its “buy” call and $3.25 target price.
See: Mapletree Industrial Trust buoyed by cautious cash management, US data centre acquisition: DBS
As at 11.45am, units in MINT are trading 2.5% higher at $3.24 with a FY21 DPU yield of 4.2%, according to Maybank’s estimates.
