According to a JP Morgan report summarising the Australian marketing trip, investors acknowledged that MPACT’s price is supported by its discount to net asset value. MPACT is trading at $1.23 versus its end-March NAV of $1.73. In addition, interest cost savings could offset its China and Japan headwinds, JP Morgan says. Interestingly, investors “were broadly supportive of a demerger”. MPACT’s Singapore properties such as Vivocity and Mapletree Business City are performing well versus its North Asian properties.
JP Morgan’s analysts were in Australia recently, on a marketing trip. Among the topics that came up for discussion were the CapitaLand Investment (CLI) and Mapletree Investments merger, catalysts for UOL Group and its subsidiary Singapore Land Group, City Developments’ (CDL) strategic review, and valuation support and demerger whisperings for Mapletree Pan Asia Commercial Trust (MPACT).
Market observers have cooled to the likelihood of a CLI-Mapletree merger, in particular on market talk that CLI was only interested in Mapletree’s private funds. “Given the reversal of the share price rally in CLI and MPACT since merger reports emerged last year, fewer investor queries on the topic in recent months, the recent CapitaLand Integrated Commercial Trust and CapitaLand Ascendas REIT equity raisings, and the difficulty in finding a win-win scenario for all stakeholders, we believe the likelihood of such a merger this year has diminished. This would be a positive outcome, as it would remove a potential overhang on the S-REIT sector, a concern raised by some investors earlier this year,” JP Morgan says.
