Mapletree Logistics Trust

Kim Eng on 22 Oct 2012

2Q & 1H FY3/13 results inline. 2QFY3/13 revenue at SGD77m (flat QoQ, +13% YoY), was 24% of ours and 25% of consensus estimate. 1HFY3/13 revenue at SGD155m (+15% YoY), was 48% of ours and 51% of consensus estimate. 2QFY3/13 DPU at 1.71 SG-cts (+0.6% QoQ, +1.2% YoY) was 24% of ours and consensus estimates. 1HFY3/13 DPU at 3.41 SG-cts (3.6% YoY) was 48% of ours and 49% of consensus estimates. Aggregate leverage remained at 37% from last quarter. Interest rate for 2QFY3/13 averaged 2,4% with an average term of debt of 4.3 years.

Portfolio review. Portfolio occupancy remains stable at 99.2% from 99% last quarter. MLT garnered 8% positive rental reversions from leases renewed/replaced in 2QFY3/13, To-date, of the 12.7% of leases (by NLA) due for renewal in FY3/13, the Manager has successfully renewed/replaced 67% of these. MLT also stated that the divestment of 30 Woodlands Loop is expected to complete by Feb 2013. Moving forward, management opined that it will focus more on acquiring assets in China and South Korea and less in Japan.  

Build-to-Suit (BTS) Development. MLT is in advanced negotiations with a major Japanese third-party logistics service provider for a BTS development at Iwatsuki Centre. Recall that this was one of two buildings, which was destroyed by a fire in 2011. The proposed modern, 2-storey chilled/dry warehouse will support the storage requirements of the targeted enduser, a listed Japanese company engaged in the provision of chilled and frozen food supplies. 

Trading yield looks tight for further compression. From our estimates, the implied cap rate for MLT (based on 2QFY3/13 results) is 5.9%. The counter is presently trading at 6.1% FY3/13 DPU yield, which we believe is almost near the end of its yield-compression cycle. MLT has risen 19% since our BUY initiation in Jun 2012. We see limited capacity expansion amongst industrialists with the slowdown in the global economy, uncertainity in the eurozone debt markets and projected ‘fiscal cliff’ in the US. Downgrade to HOLD with a TP of SGD 1.20.