SINGAPORE (July 26): Religare Capital Markets is maintaining its “buy” on Mapletree Industrial Trust (MINT) with an unchanged target price of $1.90, given its positive outlook and undemanding valuation.
In a Wednesday report, analyst Tata Goeyardi expects MINT’s full growth drivers to materialise in FY18/19 via several upcoming projects while supported by a strong balance sheet. Currently, MINT is offering a FY18 dividend yield of 6.6% versus its immediate peers’ average of 6%.
With current spot rates close to passing rents amid a slowdown in the industrial rental market, Goeyardi expects positive rental reversion for the upcoming 20.4% share of leases (by gross rental income) due for renewal in FY18 would be capped.
As a result, MINT will have to rely on inorganic activities for further growth. During the quarter, MINT completed the Phase 2 of the HP BTS project, while the $77 million AEI at Kallang Basin 4 Cluster and $60 million BTS data centre scheduled for completion in 2H18.
To recap, in 1QFY18, revenue and DPU grew by 5.6% y-o-y and 2.5% y-o-y respectively, lifted by higher rental rates achieved across property segments coupled with contribution from Phase One of the BTS development for HP and lower property expenses.
See: Mapletree Industrial Trust posts 2.5% increase in 1Q DPU to 2.92 cents
During the quarter, portfolio occupancy dipped slightly to 92.6% from 93.1% in 4Q17. The slight dip in occupancy was mainly due to lower occupancy in the flatted factories segment and the hi-tech buildings. Average portfolio passing rents grew marginally to $1.95 psf/mth from $1.94psf/mth in 4Q17. Leverage remained largely stable at 29.8% vs 29.2% in 4Q17.
“MINT’s 1Q17/18 results is line with our estimates, with revenue and DPU accounting for 24% of our full-year forecasts respectively,” says Goeyardi.
As at 9.58am, units in MINT are up 2 cents at $1.90.
