SINGAPORE (April 25): DBS Group Research is keeping its “buy” recommendation on Mapletree Industrial Trust (MINT) with an unchanged target price of $1.94.
This is on the back of “a steady DPU growth profile of 3-4% per annum, higher than its industrial peers,” says DBS lead analyst Derek Tan in a report on Tuesday.
The manager of MINT on Monday reported a 2.2% increase in FY17 distribution per unit to 11.39 cents.
This was mainly attributed to higher rental rates achieved across all property segments with initial contribution from Phase One of the build-to-suit (BTS) development for Hewlett-Packard Singapore.
(See: Mapletree Industrial Trust’s FY16/17 DPU rises 2.2% to 11.39 cents)
“The REIT offers high earnings visibility and we have confidence that the manager has the flexibility to execute on more developments to exploit its conservative balance sheet,” says Tan. “This implies potential upside to earnings.”
Mapletree Industrial Trust has a strong balance sheet with gearing at 29.2% – one of the lowest among Singapore industrial REITs.
“With the manager selective in their deployment and allocation of use of capital, we remain confident that deals, when announced, will be value accretive to unitholders,” says Tan.
While the analyst notes that MINT’s share price has done well in recent times, he believes the stock still offers an attractive total return of close to 15%.
“MINT’s resilience is a value trait in this market and has yet to be reflected in its current share price,” says Tan.
As at 11.34am, units of Mapletree Industrial Trust are trading 2 cents higher at $1.82.
