Mapletree Greater China Commercial Trust (MGCCT) reported its 2QFY15 results which exceeded its IPO forecast but were in-line with our expectations. DPU of 1.606 S cents represented a growth of 10.4% and came in 11.6% ahead of its projection. Overall portfolio occupancy remains unchanged QoQ at a healthy 99.2%. Positive rental uplift of 21% and 32% were achieved at FW’s retail and GP’s office segments, respectively, for 1HFY14. Management assured us that it does not expect its performance to be adversely affected by the Hong Kong demonstrations. In fact, some of its F&B tenants actually saw an increase in reservations as some consumers switched locations from the impacted areas. Overall tenants’ sales at FW grew 3.6% to HK$2.5b in 1HFY15 although footfall inched down slightly by 1.7% to 19.2m. We reiterate our BUY rating and S$1.00 fair value estimate on MGCCT.
2QFY15 results met our expectations
Mapletree Greater China Commercial Trust (MGCCT) reported its 2QFY15 results which exceeded its IPO forecast but were in-line with our expectations. Revenue rose 6.9% YoY to S$67.5m (9.2% above its projection) due to positive rental reversions from Festival Walk (FW) and Gateway Plaza (GP). DPU of 1.606 S cents represented a growth of 10.4% and came in 11.6% ahead of its forecast. For 1HFY15, revenue increased 7.7% to S$131.3m and constituted 47.8% of our FY15 estimate. DPU growth of 11.1% to 3.162 S cents (10.5% above MGCCT’s IPO forecast) formed 50.0% of our full-year figure.
Operating metrics exhibit resilience and comfort
Overall portfolio occupancy remains unchanged QoQ at a healthy 99.2%. Positive rental uplift of 21% and 32% were achieved at FW’s retail and GP’s office segments, respectively, for 1HFY14. 87% of MGCCT’s expiring leases for FY15 have already been committed. Its financial position also remains solid, with a comfortable gearing ratio of 37.7% and all-in average cost of debt of just 2.1%. YTD, MGCCT had already hedged ~90% of its HKD forecasted distributable income. During 2QFY15, it further hedged >70% of its 2HFY15 CNY distributable income and >80% of its 1HFY16 HKD distributable income, thus mitigating its FX volatility.
Maintain BUY
The pro-democracy protests in Hong Kong have put the spotlight on companies with large exposure there. MGGCT assured us that it has seen minimal impact for FW as it is not located in the affected areas. Going forward, it also does not expect its performance to be adversely affected by these demonstrations. In fact, some of its F&B tenants actually saw an increase in reservations as some consumers switched locations from the impacted areas. Overall tenants’ sales at FW grew 3.6% to HK$2.5b in 1HFY15 although footfall inched down slightly by 1.7% to 19.2m. We retain our projections as results were within our expectations. Since our ‘Buy’ initiation on 3 Oct this year, MGCCT’s share price has appreciated 6.1%, outperforming the STI’s and FTSE ST REIT Index’s -0.5% and 1.1% movement during the same period. We reiterate our BUY rating and S$1.00 fair value estimate.
Mapletree Greater China Commercial Trust (MGCCT) reported its 2QFY15 results which exceeded its IPO forecast but were in-line with our expectations. Revenue rose 6.9% YoY to S$67.5m (9.2% above its projection) due to positive rental reversions from Festival Walk (FW) and Gateway Plaza (GP). DPU of 1.606 S cents represented a growth of 10.4% and came in 11.6% ahead of its forecast. For 1HFY15, revenue increased 7.7% to S$131.3m and constituted 47.8% of our FY15 estimate. DPU growth of 11.1% to 3.162 S cents (10.5% above MGCCT’s IPO forecast) formed 50.0% of our full-year figure.
Operating metrics exhibit resilience and comfort
Overall portfolio occupancy remains unchanged QoQ at a healthy 99.2%. Positive rental uplift of 21% and 32% were achieved at FW’s retail and GP’s office segments, respectively, for 1HFY14. 87% of MGCCT’s expiring leases for FY15 have already been committed. Its financial position also remains solid, with a comfortable gearing ratio of 37.7% and all-in average cost of debt of just 2.1%. YTD, MGCCT had already hedged ~90% of its HKD forecasted distributable income. During 2QFY15, it further hedged >70% of its 2HFY15 CNY distributable income and >80% of its 1HFY16 HKD distributable income, thus mitigating its FX volatility.
Maintain BUY
The pro-democracy protests in Hong Kong have put the spotlight on companies with large exposure there. MGGCT assured us that it has seen minimal impact for FW as it is not located in the affected areas. Going forward, it also does not expect its performance to be adversely affected by these demonstrations. In fact, some of its F&B tenants actually saw an increase in reservations as some consumers switched locations from the impacted areas. Overall tenants’ sales at FW grew 3.6% to HK$2.5b in 1HFY15 although footfall inched down slightly by 1.7% to 19.2m. We retain our projections as results were within our expectations. Since our ‘Buy’ initiation on 3 Oct this year, MGCCT’s share price has appreciated 6.1%, outperforming the STI’s and FTSE ST REIT Index’s -0.5% and 1.1% movement during the same period. We reiterate our BUY rating and S$1.00 fair value estimate.
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