Mapletree Industrial Trust (MIT) reported a decent set of 4QFY15 results which was in-line with our expectations. Gross revenue and DPU both grew 5.6% YoY to S$79.4m and 2.65 S cents, respectively. Looking ahead, management acknowledged that its existing rents are close to market rents. Hence we expect its positive rental reversion trend to moderate further. MIT’s overall portfolio occupancy inched down from 90.8% (as at 31 Dec 2014) to 90.2% as at end FY15. Its balance sheet remains healthy, with an aggregate leverage ratio of 30.6%, while its interest rate hedge ratio now stands at 87%. We raise our DPU forecasts for FY16 and FY17 by 2% and 2.2%, respectively. Rolling forward our valuations, we bump up our fair value estimate on MIT from S$1.43 to S$1.48. Maintain HOLD, as valuations appear fair, in our view.
4QFY15 results met our expectations
Mapletree Industrial Trust (MIT) reported a decent set of 4QFY15 results which was in-line with our expectations. Gross revenue and DPU both grew 5.6% YoY to S$79.4m and 2.65 S cents, respectively. This was driven by higher rental rates and occupancies recorded for its Hi-Tech Buildings, Business Park Buildings and Light Industrial Buildings, coupled with contribution from an acquisition made in May 2014. For FY15, MIT’s gross revenue rose 4.9% to S$313.9m and in-line with our projection of S$311.4m. DPU of 10.43 S cents represented growth of 5.1% and was 1.9% ahead of our forecast.
Positive rental reversions, but likely to moderate
During the quarter, MIT managed to secure positive rental reversions for its renewal leases for its Stack-Up/Ramp-Up Buildings (+3.1%), Flatted Factories (+5.7%) and Hi-Tech Buildings (+6.0%). No renewals were signed for its Business Park Buildings. Nevertheless, we note that new leases signed for its Hi-Tech Buildings, Business Park Buildings and Stack-Up/Ramp-Up Buildings actually came in below its passing rent. Although this possibly reflects the challenging leasing environment, we believe figures may also be skewed by factors such as size of floor space leased out and level of building which is leased out. Looking ahead, management acknowledged that its existing rents are close to market rents. Hence we expect its positive rental reversion trend to moderate further.
Maintain HOLD
MIT’s overall portfolio occupancy inched down from 90.8% (as at 31 Dec 2014) to 90.2% as at end FY15. Its balance sheet remains healthy, with an aggregate leverage ratio of 30.6%, while its interest rate hedge ratio now stands at 87%. We raise our DPU forecasts for FY16 and FY17 by 2% and 2.2%, respectively, after factoring in higher NPI margin and lower borrowing cost assumptions. Rolling forward our valuations, we bump up our fair value estimate on MIT from S$1.43 to S$1.48. Maintain HOLD, as valuations appear fair, in our view. MIT is trading at 1.21x FY16F P/B ratio, which is equal to its average forward P/B ratio of 1.2x since its IPO.
Mapletree Industrial Trust (MIT) reported a decent set of 4QFY15 results which was in-line with our expectations. Gross revenue and DPU both grew 5.6% YoY to S$79.4m and 2.65 S cents, respectively. This was driven by higher rental rates and occupancies recorded for its Hi-Tech Buildings, Business Park Buildings and Light Industrial Buildings, coupled with contribution from an acquisition made in May 2014. For FY15, MIT’s gross revenue rose 4.9% to S$313.9m and in-line with our projection of S$311.4m. DPU of 10.43 S cents represented growth of 5.1% and was 1.9% ahead of our forecast.
Positive rental reversions, but likely to moderate
During the quarter, MIT managed to secure positive rental reversions for its renewal leases for its Stack-Up/Ramp-Up Buildings (+3.1%), Flatted Factories (+5.7%) and Hi-Tech Buildings (+6.0%). No renewals were signed for its Business Park Buildings. Nevertheless, we note that new leases signed for its Hi-Tech Buildings, Business Park Buildings and Stack-Up/Ramp-Up Buildings actually came in below its passing rent. Although this possibly reflects the challenging leasing environment, we believe figures may also be skewed by factors such as size of floor space leased out and level of building which is leased out. Looking ahead, management acknowledged that its existing rents are close to market rents. Hence we expect its positive rental reversion trend to moderate further.
Maintain HOLD
MIT’s overall portfolio occupancy inched down from 90.8% (as at 31 Dec 2014) to 90.2% as at end FY15. Its balance sheet remains healthy, with an aggregate leverage ratio of 30.6%, while its interest rate hedge ratio now stands at 87%. We raise our DPU forecasts for FY16 and FY17 by 2% and 2.2%, respectively, after factoring in higher NPI margin and lower borrowing cost assumptions. Rolling forward our valuations, we bump up our fair value estimate on MIT from S$1.43 to S$1.48. Maintain HOLD, as valuations appear fair, in our view. MIT is trading at 1.21x FY16F P/B ratio, which is equal to its average forward P/B ratio of 1.2x since its IPO.
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