Mapletree Logistics Trust

OCBC on 23 Jul 2012

Mapletree Logistics Trust (MLT) delivered DPU of 1.70 S cents for 1QFY13. This is largely in line with both our and consensus expectations, as it formed 24.2% and 24.6% of the respective full-year forecasts. Going forward, MLT expects business sentiments to remain cautious in view of the slowing growth in Asia and concerns over the Eurozone debt crisis. While it is expecting its portfolio assets to stay resilient, management intends to focus on strengthening its fundamentals through active asset and lease management and prudent capital management. We maintain our BUY rating with an unchanged fair value of S$1.19 on MLT.

Stable 1QFY13 results
Mapletree Logistics Trust (MLT) delivered NPI of S$67.5m (+18.4% YoY) and distributable income of S$45.8m (+18.0%) for 1QFY13. Expectedly, the strong performance came chiefly from its recent overseas acquisitions and enhanced operational performance. A total of S$4.7m from distributable income will be paid to perpetual securities holders, leaving S$41.1m for unitholders. As a result, DPU for the quarter came in at 1.70 S cents (+6.0% YoY). This is largely in line with both our and consensus expectations, as it formed 24.2% and 24.6% of the respective full-year forecasts.

Expecting positive FY13 performance
During the quarter, we note that MLT’s portfolio occupancy rate improved from 98.7% as at 31 Mar to 99.0% amid strong take-up rates in three of its Singapore multi-tenanted assets. In addition, the REIT continued to enjoy positive rental reversions of 10% on average (albeit lower than 12% achieved in prior quarter). We understand that 12.7% of its leases by NLA are due for renewal in FY13, of which ~42% has been successfully renewed/replaced to-date. Hence, we remain positive on its full-year financial performance.

Maintain BUY
Going forward, MLT expects business sentiments to remain cautious in view of the slowing growth in Asia and concerns over the Eurozone debt crisis. While it is expecting its portfolio assets to stay resilient, management intends to focus on strengthening its fundamentals through active asset and lease management and prudent capital management. In our view, MLT is certainly in a favourable position, having a strong weighted average lease to expiry (WALE) of 6 years, still healthy aggregate leverage ratio of 37% and no immediate refinancing needs (long debt duration of 4.4 years). Maintain BUY with unchanged fair value of S$1.19 on MLT.