Maybank Kim Eng’s Chua Su Tye remains sanguine on Mapletree Commercial Trust (MCT) following its 1HFY2022 ended September results announcement on Oct 27.
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Chua has kept his “buy” rating for the counter with an unchanged target price of $2.35. “The results were in line to consensus’ and our estimates, and with 1H22 revenue/NPI/DPU at 47% of our FY2022, we have kept our forecasts unchanged,” he remarks in a Oct 28 research note.
The way Chua sees it, MCT will have a stronger 2HFY2022, underpinned by rising office demand, and improvement in VivoCity’s operating metrics alongside a gradual reopening.
He notes that despite a slower q-o-q performance, MCT reported stronger y-o-y performance in 1HFY2022, with revenue and NPI up 11.5% and 10.7% respectively, driven by lower rental rebates and the compensation received from a lease pre-termination at mTower.
Portfolio occupancy climbed to 93.3%, up from 92.6% in 1QFY2022 with improvements across all its assets, except Mapletree Anson.
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Meanwhile, revenue and NPI at VivoCity fell 20.5% and 22.7% on a half-year basis, but was up 2.6% and 4.0% respectively on a q-o-q basis on the back of higher occupancy, which improved from 97.7% to 98.6%, and with committed occupancy higher at 99.6%.
Chua has a flattish outlook for rent reversions at Vivocity following the 3.5% recorded for the 1HFY022, with upside risk from further easing restrictions.
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MCT’s assets under management were up 0.5% at $8.8 billion, while gearing remains low at 33.7%. Chua notes that MCT’s growth profile is stronger from its MBC assets, which now contribute some 43% of AUM, ahead of retail assets at around 36%.
"While a $1.8b billion debt headroom (at 45% limit) offers deal options, and management is eyeing AUM growth, visibility is low given tight office cap rates and a limited sponsor Singapore pipeline,” he comments.
Chua highlights that valuations are undemanding at 4.5% dividend yield, with better DPU visibility from its MBC assets, and added traction from VivoCity’s recovery into the coming quarters.
Units in MCT closed down 5 cents or 2.28% lower at $2.14 on Nov 3.
Photo: Vivocity / Mapletree Commercial Trust
