SINGAPORE (Apr 25): Mapletree Industrial Trust (MINT) ended FY18 well, setting the stage for a strong FY19 and is projected to deliver a steady growth profile on the back of well-timed contribution from projects over FY18-19.
For 4Q18, MINT reported DPU grew 2.4% y-o-y, driven by contribution from the build-to-suit (BTS) for HP as well as contribution from its 40% stake in 14 data centres in the US.
See: Mapletree Industrial Trust reports 2.4% higher 4Q DPU of 2.95 cents
In a Wednesday report, DBS analyst Derek Tan says the house is a firm believer of MINT’s overseas ventures.
While investors have long attributed MINT’s premium valuations to its Singapore “pureplay” status, Tan believes this view is changing, given its strong share price reaction after its recent fund raising for the acquisition of a portfolio of 14 data centres in the US.
Meantime, Tan expects MINT to maintain current valuations given its ability to deliver steady earnings profiles. The REIT’s conservative gearing of 33% also empowers it to deliver more inorganic growth surprises.
DBS is maintaining its “buy” with target price of $2.22.
CIMB analyst Yeo Zhi Bin says MINT’s FY18 DPU of 11.75 cents came in line with consensus forecasts and 101% of the house’s expectations. 4Q18 DPU of 2.95 cents was also at 25% of its full-year forecast.
CIMB is maintaining its “add” on MINT with a target price of $2.12, given MINT’s growth trajectory remains intact.
Yeo is forecasting a two-year 4.6% DPU CAGR through FY20, backed by full-year contribution of the US data centres in FY19, ramp-up of 70A Kallang Place in FY19-20 and BTS data centre in FY20.
In addition to incremental contribution from HP, Yeo says there is the possible acquisition of 18 Tai Seng from its sponsor while MINT seeks for more US data centres to purchase.
Phillip Securities says MINT’s portfolio value remains stable, with slight tightening of capitalisation rates.
Analyst Richard Leow says full year contribution from JV platform of US data centres to adequately offset any softness from the Singapore portfolio. The manager also expects softer leasing from flatted factories, while business park buildings to remain fairly strong.
As gearing remains at a relatively low 33.1%, MINT can afford a debt headroom of $340 million by Leow’s estimate, potentially growing AUM by 8%. Average debt maturity has improved from 3.0 years to 3.3 years although interest cost is expected to creep up.
“Estimated yield of ~6% should be stable, but current valuation is rich,” says Leow, “Forward P/NAV multiple is now about +2 standard deviations above the historical average, and we are cognisant of the risk of it reverting to mean. Our target price represents an implied 1.48
times FY19 P/NAV multiple.”
Units in MINT are trading flat at $2.00 giving it a forecast FY18 DPU yield of 5.9% by Phillip.
