SINGAPORE (Oct 24): OCBC Investment Research is keeping its “buy” call on Mapletree Logistics Trust (MLT) with an unchanged fair value estimate of $1.35 amid the rejuvenation of its portfolio.
In the 2Q ended September, MLT had completed the divestments of three properties – Zama Centre and Shiroishi Centre in Japan, as well as 4 Toh Tuck Link in Singapore.
“The combined divestment gains of approximately $5.4 million will be distributed to unitholders over six to eight quarters, while the proceeds received will be redeployed into its asset enhancement initiatives and inorganic growth opportunities,” says OCBC lead analyst Andy Wong Teck Ching in a Tuesday report.
At the same time, MLT acquired Mapletree Logistics Hub Tsing Yi in Hong Kong for HK$4.8 billion ($834.8 million).
The acquisition of the 11-storey modern ramp-up warehouse from its sponsor was completed on Oct 12, and offers an initial yield of 5.7%.
See: Mapletree Logistics Trust to acquire Hong Kong warehouse for $834.8 mil
“Looking ahead, MLT continues to see sustained leasing activities across its markets, although supply pressures in Singapore are likely to hamper the recovery process. Management has thus been diversifying its exposure into other geographies,” Wong adds.
However, he cautions that rental reversions had moderated in 2QFY18, slowing to positive rental reversions of 1.4% in 2Q, compared to the 6% rental reversion achieved in the preceding quarter.
Meanwhile, Wong notes that MLT’s overall portfolio occupancy inched up slightly to 95.8% as at end September, from 95.5% in the preceding quarter.
MLT on Monday posted a 1.5% increase in DPU to 1.887 cents for 2Q18, bringing DPU for the first half to 3.774 cents.
Gross revenue for the quarter rose 2.3% on-year to $93.7 million, from $91.6 million a year ago.
In line with the higher revenue, net property income (NPI) rose 2.5% to $78.7 million, from $76.8 million a year ago.
See: Mapletree Logistics Trust posts 1.5% rise in 2Q DPU to 1.887 cents
Wong says MLT’s results met OCBC’s expectations, with DPU of 3.774 cents constituting 49.7% of its full-year projection.
As at 3.05pm, units of MLT are trading 2 cents lower at $1.255, implying an estimated price-to-earnings ratio of 14.7 times and DPU yield of 5.9% in FY18.
