Maybank Securities analyst Krishna Guha has kept “buy” on Mapletree Logistics Trust M44U (MLT) after it reported a set of results that stood within the analyst’s expectations.
MLT, on Oct 24, reported a distribution per unit (DPU) of 2.268 cents for the 2QFY2024 ended Sept 30, 0.9% higher y-o-y. Its 1HFY2024 DPU of 4.539 cents, up 0.5% y-o-y, was 51.5% of Guha’s full-year estimate.
“Organic growth, contributions from acquisitions and top-ups from divestment gains drove distributions. This was offset by lower income from China, higher funding cost and foreign exchange (forex) depreciation,” he notes.
In his report dated Oct 26, the analyst also noted the REIT’s stable operating metrics and its focus on recycling capital. MLT’s occupancy fell by 20 basis points q-o-q to 96.9%, led by China and Japan. Its portfolio reversion stood at 0.2%. Excluding its China portfolio, reversions came in at 9.1%.
“MLT is actively rejuvenating the portfolio with over $900 million of acquisitions and $150 million of divestments year-to-date (exit net property income or NPI of 3.5% - 4%), and over $370 million of ongoing asset enhancement initiatives (AEIs),” Guha writes.
“Rental rates across most of MLT’s markets are expected to remain stable, while rent reversion in China is likely to remain negative in the near term,” he adds.
See also: DBS, calling Mapletree Logistics 'citadel of stability', maintains 'buy' call
Despite these, Guha has lowered his target price to $1.60 from $1.80 after factoring in a higher cost of equity coupled with a higher discount rate.
He has also lowered his DPU forecast by 0.5% after factoring in lower contributions from China.
That said, he remains positive on the REIT. His maintained “buy” call is due to the REIT’s “disciplined execution” and network of warehouses in the region, which have structural medium-term tailwinds.
As at 2.20pm, units in MLT are trading flat at $1.47.
