Mapletree Logistics Trust (MLT) recently announced its intention to acquire Mapletree Wuxi Logistics Park in China from its Sponsor. The purchase consideration of RMB116m was at a 2.5% discount to the average valuation of RMB119m by two independent valuers. Management guided that the acquisition is expected to be accretive at the DPU level, with an initial NPI yield of 8.0%. This is higher than the implied yield of 6.0% for MLT’s existing China portfolio. Separately, MLT also updated that the divestment of 30 Woodlands Loop in Singapore to Accenovate Engineering Pte Ltd will not proceed. This was because the buyer’s application to purchase the property was not approved by JTC Corporation as it did not meet its evaluation criteria. We have earlier assumed the divestment to be completed by Feb 2013, as previously guided by MLT. We now factor the China warehouse acquisition into our forecasts and reverse the divestment of 30 Woodlands Loop as the sale will not be completed. Accordingly, our fair value inches up slightly from S$1.24 to S$1.25. We maintain BUY on MLT.
Acquisition of China warehouse
Mapletree Logistics Trust (MLT) recently announced its intention to acquire Mapletree Wuxi Logistics Park (MWLP) in China from its Sponsor. The purchase consideration of RMB116m (~S$22.8m) was at a 2.5% discount to the average valuation of RMB119m by two independent valuers. Management guided that the acquisition is expected to be accretive at the DPU level, with an initial NPI yield of 8.0%. This is higher than the implied yield of 6.0% for MLT’s existing China portfolio. According to MLT, MWLP is located in Wuxi New District where it enjoys good connectivity, hence making it suitable as a distribution centre for both domestic and overseas market. At present, we understand that MWLP is leased to a strong tenant base of reputable companies including Wuxi Hi-tech, Kerry Logistics and Fiege International Freight Forwarder. The transaction is in line with our view that MLT will seek to expand its presence in overseas market such as China. Upon completion, it will represent MLT’s third acquisition from its Sponsor’s development pipeline.
Sale of Woodlands property will not proceed
Separately, MLT also updated that the divestment of 30 Woodlands Loop in Singapore to Accenovate Engineering Pte Ltd will not proceed. This was because the buyer’s application to purchase the property was not approved by JTC Corporation as it did not meet its evaluation criteria. MLT expressed disappointment with the unsuccessful sale but said it will continue to optimize the property’s yield while actively explore divestment or other value-enhancing opportunities. We have earlier assumed the divestment to be completed by Feb 2013, as previously guided by MLT.
Maintain BUY
We now factor the China warehouse acquisition into our forecasts (expected to complete by Mar 2013). We also reverse the divestment of 30 Woodlands Loop as the sale will not be completed. Accordingly, our fair value inches up slightly from S$1.24 to S$1.25. Aggregate leverage is expected to reach 37.3% based on MLT’s estimates, assuming the acquisition is fully funded by debt. Maintain BUY.
Mapletree Logistics Trust (MLT) recently announced its intention to acquire Mapletree Wuxi Logistics Park (MWLP) in China from its Sponsor. The purchase consideration of RMB116m (~S$22.8m) was at a 2.5% discount to the average valuation of RMB119m by two independent valuers. Management guided that the acquisition is expected to be accretive at the DPU level, with an initial NPI yield of 8.0%. This is higher than the implied yield of 6.0% for MLT’s existing China portfolio. According to MLT, MWLP is located in Wuxi New District where it enjoys good connectivity, hence making it suitable as a distribution centre for both domestic and overseas market. At present, we understand that MWLP is leased to a strong tenant base of reputable companies including Wuxi Hi-tech, Kerry Logistics and Fiege International Freight Forwarder. The transaction is in line with our view that MLT will seek to expand its presence in overseas market such as China. Upon completion, it will represent MLT’s third acquisition from its Sponsor’s development pipeline.
Sale of Woodlands property will not proceed
Separately, MLT also updated that the divestment of 30 Woodlands Loop in Singapore to Accenovate Engineering Pte Ltd will not proceed. This was because the buyer’s application to purchase the property was not approved by JTC Corporation as it did not meet its evaluation criteria. MLT expressed disappointment with the unsuccessful sale but said it will continue to optimize the property’s yield while actively explore divestment or other value-enhancing opportunities. We have earlier assumed the divestment to be completed by Feb 2013, as previously guided by MLT.
Maintain BUY
We now factor the China warehouse acquisition into our forecasts (expected to complete by Mar 2013). We also reverse the divestment of 30 Woodlands Loop as the sale will not be completed. Accordingly, our fair value inches up slightly from S$1.24 to S$1.25. Aggregate leverage is expected to reach 37.3% based on MLT’s estimates, assuming the acquisition is fully funded by debt. Maintain BUY.
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