Tuesday 23 July 2013

Mapletree Logistics Trust

OCBC on 22 Jul 2013

Mapletree Logistics Trust (MLT) reported 1QFY14 DPU of 1.80 S cents, up 5.9% YoY. Stripping out divestment gain from 30 Woodlands Loop, DPU would be up 4.7%. The results were in line with expectations, as 1Q DPU have met 24.8%/25.4% of our/consensus full-year DPU projections. Overall occupancy stood at 98.2%, largely stable from 98.5% seen in previous quarter. In addition, positive rental reversion of 17% was achieved. This is higher than prior quarter’s growth of 14%, although MLT maintains its view that the rate is set to moderate going forward. MLT also updated that its redevelopment project at 21 Benoi Sector in Singapore is on track for completion in 3QFY14, and that the property is currently 94% pre-leased. In the coming quarter, The Box Centre in Korea (acquired in Jul at NPI yield of 8.4%) will start contributing to MLT’s topline. We are keeping our forecasts intact for now as the results were within expectations. Maintain HOLD with an unchanged fair value of S$1.15 on MLT.

1QFY14 performance in line
Mapletree Logistics Trust (MLT) reported 1QFY14 gross revenue of S$75.4m and NPI of S$65.3m, down 2.2% and 3.3% respectively. The decline was mainly due to a weaker JPY. Excluding the forex impact, gross revenue and NPI would have increased by 3.1% and 2.0% respectively. The impact of the depreciating JPY on distributable income was limited as ~90% of the amount is hedged into or derived in SGD. During the quarter, MLT also benefitted from lower borrowing costs and a S$0.6m distribution of the divestment gain from 30 Woodlands Loop (S$5.0m spread over eight quarters from 1Q). As a result, amount distributable to unitholders rose 6.9% YoY to S$44.0m, while DPU grew 5.9% to 1.80 S cents. Stripping out the divestment gain, DPU would be up 4.7% YoY. The results were in line with expectations, as 1Q DPU have met 24.8%/25.4% of our/consensus full-year DPU projections.

Underlying performance remains sound
Overall occupancy stood at 98.2%, largely stable from 98.5% seen in previous quarter. There was a 2.9ppt QoQ dip in MLT’s China portfolio occupancy due to a non-renewal of a tenant, but management noted that the space has since been leased out. For FY14, ~15% of the leases are due for renewal, and ~27% of these have already been renewed/replaced to-date. In addition, positive rental reversion of 17% was achieved. This is higher than prior quarter’s growth of 14%, although MLT maintains its view that the rate is set to moderate going forward.

Maintain HOLD on valuation grounds
MLT also updated that its redevelopment project at 21 Benoi Sector in Singapore is on track for completion in 3QFY14, and that the property is currently 94% pre-leased. This, we note, represents an improvement from its pre-commitment level of 75% as at 28 Jun. In the coming quarter, The Box Centre in Korea (acquired in Jul at NPI yield of 8.4%) will start contributing to MLT’s topline. We are keeping our forecasts and S$1.15 fair value intact for now as the results were within expectations. Maintain HOLD on MLT.

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