SINGPORE (Apr 30): Mapletree Industrial Trust (MINT) is being upgraded to “add” from “hold” previously by CGS-CIMB Research with an unchanged target price of $2.66.
In a Tuesday report, analyst Lock Mun Yee says, “We continue to like MINT for its good execution track record with visible earnings growth from ongoing development activities and exposure to the US data centre sector.”
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The trust on Monday announced that its 4Q20 DPU was 7.5% down y-o-y at 2.85 cents, with revenue increasing by 3.0% y-o-y to $101.8 million. But on a full-year basis, DPU marginally increased by 0.7% y-o-y to 12.24 cents, with growth coming the trust’s 13 newly-acquired data centres in North America via a joint venture.
See: Mapletree Industrial Trust reports 7.5% drop in 4Q DPU to 2.85 cents
Portfolio occupancy improved to 91.5% at end-4Q with an uptick in Singapore properties and higher US occupancy, while rental reversion remained stable.
Looking ahead, MINT has 17.7%/17% of its gross rental income to be renewed in FY21/FY22. Management said about 55% of its Singapore portfolio is made up of SME tenants and about half its tenants stayed open during the Circuit Breaker period. That said, it has rolled out a Covid-19 relief programme of up to $13.7 million.
Meanwhile, flatted factories accounted for some 37% of MINT’s FY20 NPI. Hence, CGS-CIMB has assumed one to two months’ of rental rebates within the trust’s flatted factories portfolio and factored in a 1-3 percentage point increase in vacancies over FY21-22.
“Nonetheless, a full-year’s contribution from the newly-acquired data centres in US and Canada should partly offset some of the expected weaker Singapore performance, in our view,” says Lock.
MINT purchased an attributable 50% stake in three fully fitted hyperscale and 10 powered shell data centres in US and Canada, for $695.4 million. These assets are estimated to add some $29 million of net profit into MINT’s bottomline for FY21, while total overseas contributions is projected to make up about 16% of the trust’s FY21 distributable income.
As at 3.30pm, units in MINT are trading 1.19% higher at $2.56 or 1.5 times FY20 book with a dividend yield of 5.0%.