Mapletree Logistics Trust

OCBC on 23 Apr 2012

Mapletree Logistics Trust (MLT) posted a 12.3% YoY increase in NPI to S$61.4m and a 10.1% YoY increase in distributable amount to S$41.3m for the financial quarter ended 31 Mar 2012, in line with our projections. The strong performance, we note, came on the back of contribution from acquisitions and a 5.6% organic growth from its existing portfolio. In the coming year, we understand that about 15% of MLT’s leases will be up for renewal, of which ~19% has been renewed ahead of expiry. Amidst the ongoing economic uncertainties, management guided that the organic growth and positive rental reversions are likely to moderate going forward. However, MLT added that attractive investment opportunities have resurfaced, and that acquisitions in overseas markets like Korea, China and Australia may materialize in the coming months. MLT’s financial position is now fortified, following the recent issuance of perpetual securities and an asset revaluation gain. This provides MLT with ample financial flexibility to pursue its investment opportunities. Maintain BUY with unchanged fair value of S$1.20.

Consistent set of results
Mapletree Logistics Trust (MLT) posted a 12.3% YoY increase in NPI to S$61.4m and a 10.1% YoY increase in distributable amount to S$41.3m for the financial quarter ended 31 Mar 2012. This is in line with our projections of S$63.0m and S$42.0m respectively. DPU similarly grew by 9.7% YoY to 1.70 S cents and is also consistent with our estimate of 1.73 S cents. Together with the DPU of 4.99 S cents in the last three quarters, DPU for the trailing four quarters ending 31 Mar amounted to 6.69 S cents. This translates to a respectable DPU yield of 6.9%.

Performance driven by acquisitions and organic growth
The strong performance, we note, came on the back of contribution from acquisitions and a 5.6% organic growth from its existing portfolio. Positive rental reversions of 12% were achieved during the quarter, mainly from leases in Singapore and Hong Kong. The portfolio occupancy also improved from 98.3% a year ago to 98.7%. While there was a slight dip from 98.8% in preceding quarter, it was merely due to a transition from single-user asset to multi-tenanted buildings for two properties in Singapore.

Maintain BUY
In the coming year, we understand that about 15% of MLT’s leases (by revenue contribution) will be up for renewal, of which ~19% has been renewed ahead of expiry. Amidst the ongoing economic uncertainties, management guided that the organic growth and positive rental reversions (anticipating 5-10% range) are likely to moderate going forward, although occupancy is expected to remain stable. However, MLT added that attractive investment opportunities have resurfaced, and that acquisitions in overseas markets like Korea, China and Australia may materialize in the coming months. In addition, it may divest non-core assets and deploy the proceeds on investments in better yield-accretive properties. We keep our FY12-13 forecasts largely intact as the results were in line with our expectations. Maintain BUY with unchanged fair value of S$1.20.