Mapletree Logistics Trust

Kim Eng on 19 Apr 2013

FY3/13 DPU at the low end of our estimate. FY3/13 revenue at SGD308m (+11% YoY) was 101% of ours and consensus estimate. FY3/13 DPU at 6.86 SG-cts (+2.5% YoY) was at the low end of ours and
consensus estimates (98%), dragged down by a weaker Japanese Yen. Aggregate leverage inched down to 34.1% from 35.9% last quarter. Interest rate for 4QFY3/13 averaged 2.40% (unchanged) with an average term of debt of 3.9 years. Revaluation gains softened to SGD20m from SGD113m last year, signaling that property prices are probably near the tail end of its peak cycle.

Impact of JPY Depreciation. We noted that the Japan portfolio suffered a 12% QoQ decline in revenue and NPI. This was attributed to the weakening of Yen against SGD, which has depreciated ~9% last quarter. MLT also has six out its top ten tenants that are Japanese corporations, amounting to ~15% of 4QFY3/13 gross revenue. Nonetheless, management maintained that the JPY impact on DPU is offset by its existing forex hedges, which is 85% hedged in FY3/14 and more than 50% hedged in FY3/15-FY3/16.

Divestment still in progress. MLT will be distributing the divestment gain of 30 Woodlands Loop, expected to complete by May 2013, over FY3/14- FY3/15. We think this is part of its strategy to keep the flexibility for DPU top-up, in the event of DPU declines in subsequent quarters. We have factored in a gain of SGD4.95m. This will boost our FY3/14-FY3/15 DPU by 0.10 SG-cts each.

More acquisitions in FY3/14? Management admitted that growth was lethargic in FY3/13 and rentals in Singapore remain challenging with 18% of available stock of warehouse space (private sector; 14m sqft) coming onboard in 2013-2015. It will however be more aggressive on the acquisition front this year, targeting sponsor injections such as Mapletree Shah Alam Logistics Park in Malaysia (almost fully leased) and Mapletree Zhengzhou International Logistics Park in China. Both acquisitions are likely to cost ~SGD80m with 7-8% NPI yield-on-cost. MLT also cited possible acquisitions in China/Korea/Malaysia/Singapore and BTS initiatives in Singapore/China. Its redevelopment project at 21/23 Benoi Sector is on track for completion in 3QFY3/14 and is 60-80% precommitted. Given the high valuation it is currently trading (1.4x P/B), and the absence of concrete catalysts, we believe this counter is fairly priced at
the moment. Reiterate HOLD with TP of SGD1.22.