SINGAPORE (July 25): Analysts are remaining positive on Mapletree Logistics Trust (MLT) following the trust’s recent 1Q19 earnings announcement.
MLT recorded a 3.7% rise in 1Q19 DPU to 1.957 cents, compared to 1Q18 DPU of 1.887 cents.
Gross revenue for the quarter was 10.1% higher at $105.4 million from $95.8 million last year, which brought net property income (NPI) to $89.8 million, 11.1% higher than $80.8 million in 1Q18.
This was thanks to higher revenue from existing properties and acquisition in Hong Kong, albeit partly offset by income vacuum from divestment of five assets and weaker HKD and JPY.
Concurrently, MLT’s manager has also announced the re-commencement of its distribution reinvestment plan (DRP), which involves issuing units in lieu of cash and will be applied to the balance distribution for 1Q19.
See: Mapletree Logistics Trust posts 3.7% rise in 1Q DPU to 1.957 cents; recommences distribution reinvestment plan
Following this announcement, CGS-CIMB is maintaining its “add” call on MLT with a target price of $1.39.
Portfolio occupancy for 1Q19 dropped by 0.9% pts to 95.7%, dragged down by lower Singapore, South Korea and Vietnam take-up, as well as inclusion of occupancy of its 50%-owned JV China portfolio. And including pre-commitments of the latter, overall portfolio occupancy would have been up q-o-q to 97.1%.
On the other hand, the trust achieved positive rental reversion of 2.1% during the quarter, led by HK, China and Malaysia while Singapore renewals remained fairly flat.
In 1Q19, the trust announced two major transactions. The first transaction is the acquisition of 50% stake in 11 China properties for $296.5 million.
In a Tuesday report, analyst Lock Mun Yee says, “We expect the positive boost from this purchase to be felt from 2QFY3/19F onwards.”
The second is the proposed purchase of five Singapore ramp-up properties from CWT International for $778 million, which post-purchase would account for about 33% of the trust’s assets under management (AUM) and around 41% of revenue.
DBS is also reiterating its “buy” recommendation on MLT with a target price of $1.53.
In a Tuesday report, analyst Derek Tan says, “After its recent announcement to acquire a portfolio of modern logistics properties in Singapore, we remain excited on MLT’s growth prospects. Coupled with a stronger balance sheet post recapitalisation, improving organic growth outlook and a myriad of acquisitions, we believe that the REIT’s improved earnings prospects will translate into higher valuations going forward.”
The research house’s target price is higher than the consensus average, as the analyst believes that the street has yet to account for the improved fundamentals post acquisition and potential to surprise on the upside organically and through more acquisitions.
The analyst believes that the group’s DPU increase momentum will likely carry on in the 2H19, with the potential completion of its acquisition of five warehouses in Singapore coupled with a visible acquisition pipeline from its sponsor.
As at 11.15am, units in MLT are trading 1 cent lower at $1.28 or 1.15 times FY19 book with a dividend yield of 6.15%.
