Analysts at UOB Kay Hian and CGS-CIMB maintain their “hold” calls for Mapletree Logistics Trust (MLT), citing unattractive yield versus other industrial REITs.
In an Oct 25 note, CGS-CIMB analysts Lock Mun Yee and Eing Kar Mei note that while they like MLT for its pan-Asian logistics asset focus, the FY2022F dividend yield of about 4.3% is on the lower end when compared to its peers.
The analysts have tweaked MLT’s FY2022F to FY2024F distribution per unit (DPU) estimates by 0.16% to 0.76%, aside from lifting its dividend discount model (DDM)-based target price to $2.11.
Meanwhile, UOB Kay Hian analyst Jonathan Koh has kept his DPU forecasts and target price unchanged at $2.08.
MLT reported a 5.7% y-o-y rise in 2QFY22 DPU of 2.173 cents. This was driven by a 25.2% y-o-y improvement in gross revenue due to higher contributions from existing properties, accretive acquisitions and income from the recently completed redevelopment of Mapletree Ouluo Logistics Park P2 in China.
See: Mapletree Logistics Trust posts 5.7% growth in 2QFY21/22 DPU of 2.173 cents
Koh says MLT has achieved positive rental reversion of 2.4% for 541,370 sq m of new and renewed leases in 2QFY22, a slight pick-up compared with 2.2% in 1QFY22. The positive reversions were contributed by Malaysia (3%), Vietnam (3%), Hong Kong (2.6%), China (2.5%) and South Korea (2%). He adds that the retention rate was healthy at 91%.
MLT’s portfolio occupancy held steady q-o-w at 97.8% as at end-2Q. This was supported by higher occupancies in Singapore, Japan and Hong Kong, but moderated by lower takeup in China, Lock and Eing note.
They add that there were positive rental reversions of 2.4% coming across its geographic footprint, mainly from renewal or replacement leases, with the most uplift from Hong Kong, Vietnam, Malaysia, South Korea and Singapore.
“The trust has a remaining 14.6% and 28.5% of rental income to be renewed in 2HFY22F and in FY23F, respectively. Management highlighted that while there is expansion demand, tenants remain cautious on rent reversions. Nonetheless, we believe the positive reversion trend will likely remain intact,” the analysts say.
UOB Kay Hian’s Koh expects MLT to step up the pace of acquisitions in 2HFY22. It has announced three recent acquisitions, the first being Yeoju Logistics Centre in South Korea worth 235 billion won. The freehold property comprises two blocks of dry warehouses that were completed in 2019.
Fully leased to one of South Korea’s largest online fashion platforms and a domestic third-party logistics service provider, the acquisition will raise MLT’s e-commerce revenue exposure in South Korea from 24% to 31%, says Koh.
The second acquisition is of a cold storage facility in Melbourne, Australia worth A$42.8 million The property with net lettable area of 14,747sq m comprises five blocks of cold and freezer warehouse, ambient warehouse and office. The property is 100% leased to Austco Polar Cold Storage, a wholly-owned subsidiary of Australian Securities Exchange-listed Wingara AG.
The last acquisition is of Mapletree Logistics Hub at Tanjung Pelepas, Malaysia worth RM404.8 million. The property comprises two blocks of two-storey ramp-up warehouses and one block of one-storey warehouse. It is leased to multiple tenants, including Decathlon and Maersk.
Koh says MLT is pursuing acquisitions of logistics properties in China from sponsor Mapletree Investments and in Japan from third party vendors. The deal size for both transactions is expected to be substantial, he adds.
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On top of acquisitions, MLT could potentially undertake asset enhancement opportunities in Singapore, the CGS-CIMB analysts highlight. “MLT’s gearing stands at 38.2% at 2QFY22, providing the trust with good debt headroom to pursue inorganic expansion opportunities. MLT has only 3% of its total debt due to be refinanced in FY22 while all-in interest cost stands at 2.2%.”
As at 2.07pm, units in MLT are trading 1% higher at $2.01.
Photo: MLT
