Mapletree Logistics Trust (MLT) announced early this week that it is considering the issuance of SGD-denominated perpetual securities. We view the initiative positively, as it provides the much-needed ammunition for its acquisition plans and to pare down its aggregate leverage. At the investor presentation held on 6 Mar, management also took the opportunity to share with us its growth plans across different geographical locations. We are confident that MLT will be able to continue optimizing its portfolio yield, given its disciplined approach towards acquisitions. We are holding off revising our estimates pending more details on the securities issuance. However, as we roll over valuations to FY13 and factor in the recent acquisitions in Malaysia, our fair value is now raised to S$1.18 (S$1.10 previously). Maintain BUY on MLT.
Proposed issuance of perpetual securities
Mapletree Logistics Trust (MLT) announced earlier this week that it is considering the issuance of SGD-denominated perpetual securities. We view the initiative positively as it provides the much-needed ammunition for its acquisition plans. As the perpetual securities are expected to be fully accounted as equity, the issuance also has the effect of paring down MLT’s aggregate leverage. Based on our conversations during an investor presentation held on 6 Mar, we estimate that the aggregate principal amount may fall in the range of S$300-500m, with a five-percent handle for its distribution rate. Together with an expected positive revaluation of its properties in the coming Mar quarter, we believe its leverage may be brought down from 41.4% as at 31 Dec 2011 to a more comfortable 36.5-38.5% level.
Prudent approach towards investments
Management also took the opportunity to share with us its growth plans across different geographical locations during the presentation. In particular, MLT reiterated that it has been careful not to rush into investments but rather work closely with its sponsor on various overseas acquisitions – a prudent move in our view, given the current uncertain market conditions. The group also highlighted that there are ~S$300m worth of pipeline assets from sponsor that are completed, and that it may acquire some of them during the course of the year. We are confident that MLT will be able to continue optimizing its portfolio yield, given its disciplined approach towards acquisitions. We note that its acquisition of two properties in Malaysia just a week ago were made at attractive initial NPI yields of 8.7-8.8%, significantly higher than the implied yield of 7.1% for its existing Malaysia portfolio.
Retain BUY
We will hold off revising our estimates pending more details on the securities issuance. However, as we roll over valuations to FY13 and factor in the recent acquisitions, our fair value is now raised to S$1.18 (S$1.10 previously). Maintain BUY on MLT.
Mapletree Logistics Trust (MLT) announced earlier this week that it is considering the issuance of SGD-denominated perpetual securities. We view the initiative positively as it provides the much-needed ammunition for its acquisition plans. As the perpetual securities are expected to be fully accounted as equity, the issuance also has the effect of paring down MLT’s aggregate leverage. Based on our conversations during an investor presentation held on 6 Mar, we estimate that the aggregate principal amount may fall in the range of S$300-500m, with a five-percent handle for its distribution rate. Together with an expected positive revaluation of its properties in the coming Mar quarter, we believe its leverage may be brought down from 41.4% as at 31 Dec 2011 to a more comfortable 36.5-38.5% level.
Prudent approach towards investments
Management also took the opportunity to share with us its growth plans across different geographical locations during the presentation. In particular, MLT reiterated that it has been careful not to rush into investments but rather work closely with its sponsor on various overseas acquisitions – a prudent move in our view, given the current uncertain market conditions. The group also highlighted that there are ~S$300m worth of pipeline assets from sponsor that are completed, and that it may acquire some of them during the course of the year. We are confident that MLT will be able to continue optimizing its portfolio yield, given its disciplined approach towards acquisitions. We note that its acquisition of two properties in Malaysia just a week ago were made at attractive initial NPI yields of 8.7-8.8%, significantly higher than the implied yield of 7.1% for its existing Malaysia portfolio.
Retain BUY
We will hold off revising our estimates pending more details on the securities issuance. However, as we roll over valuations to FY13 and factor in the recent acquisitions, our fair value is now raised to S$1.18 (S$1.10 previously). Maintain BUY on MLT.
No comments:
Post a Comment