SINGAPORE (July 25): Mapletree Logistics Trust (MLT) listed on the Singapore Exchange (SGX) in July 2005, with just 15 Singapore-based properties in its IPO portfolio.
Fast forward 14 years, the REIT’s portfolio as at June 30 comprises 137 properties across Singapore, Hong Kong, Japan, Australia, South Korea, China, Malaysia and Vietnam valued at $7.9 billion.
Year to date, the counter is up 25.2% at $1.59 as it rides on strengthening market dynamics.
In its latest 1Q20 results, MLT recorded a 3.5% rise in distribution per unit (DPU) to 2.025 cents from 1.957 cents a year ago. This was despite an enlarged unit base, as total number of issued units increased to 3.64 billion units during the period, 12.1% higher than 3.24 billion units last year.
See: Mapletree Logistics Trust posts 3.5% rise in 1Q DPU to 2.025 cents despite enlarged base
Amount distributable to unitholders grew 20.8% to $73.6 million in 1Q20, from $60.9 million a year ago. Revenue increased 13.6% to $119.8 million.
Portfolio occupancy for 1Q20 stood at 97.6%, down from 98% last quarter, reflecting slightly lower occupancy rates in Singapore, Hong Kong and South Korea, which were partially offset by higher occupancy in China.
In April this year, MLT divested five properties in Japan for JPY 12.5 billion ($213.3 million), representing a 21% premium to the appraised value of the five properties as at March 31, and well as 13% above the original purchase cost.
Following the 2Q results release, which came mostly in line with expectations, analysts are staying "neutral" on the REIT.
Maybank Kim Eng and CGS-CIMB Research are both keeping their “hold” calls on MLT with the same target price of $1.55.
In view of macro headwinds, MLT’s management is adopting a more cautious outlook as tenants – especially in Singapore and Hong Kong – are hesitating on renewals and capacity expansion.
“Its diversified portfolio, supported by deals in FY19, will likely cushion macro uncertainties,” says Maybank analyst Chua Su Tye in a Tuesday report.
In addition, Chua expects a pick-up in rents only from 2020, supported by easing supply.
Sharing the same views in a Tuesday report, CGS-CIMB analyst Lock Mun Yee says, “Cautious sentiment is returning in Singapore and Hong Kong although portfolio quality could still keep occupancies and rental reversions resilient.”
Meanwhile, DBS Group Research is more bullish on the counter, as it keeps its “buy” call on MLT with a target price of $1.85.
With MLT’s gearing currently at 37% and cash and cash equivalents at $118.9 million, DBS lead analyst Derek Tan believes that MLT has the firepower to acquire more assets.
“With an active pipeline from the sponsor and a myriad of opportunities from third parties, we believe that the manager will be keen to re-invest the proceeds and utilise its debt headroom to drive accretive acquisitions,” says Tan.
As at 4.10pm, units in MLT are trading at $1.59 or 1.4 times FY20 book with a dividend yield of 4.9%.
