Mapletree Greater China Commercial Trust (MGCCT) reported its 3QFY15 results which met our expectations. Gross revenue grew 12.0% YoY to S$73.6m, while DPU jumped 9.5% to 1.662 S cents. Positive rental uplift of 21% and 32% was achieved at Festival Walk’s (FW) retail and Gateway Plaza’s office segments, respectively, as at 31 Dec 2014. Overall portfolio occupancy stood at a healthy 99.4%, while YoY growth in FW’s footfall and tenants’ sales were accomplished in 3QFY15 despite the challenging Hong Kong retail scene. Since our initiation on MGCCT with a ‘Buy’ rating in 3 Oct last year, its share price has jumped 13.3% (total returns of 16.8% if we include 1HFY15’s 3.162 S cents distribution). At current price level, we see limited potential total returns ahead. Hence, we downgrade MGCCT to HOLD on valuation grounds, with a marginally higher fair value estimate of S$1.01 (previously S$1.00).
3QFY15 results came in within our expectations
Mapletree Greater China Commercial Trust (MGCCT) reported its 3QFY15 results which met our expectations. Gross revenue grew 12.0% YoY to S$73.6m, while DPU jumped 9.5% to 1.662 S cents. This robust set of performance was underpinned by sturdy rental reversions achieved at both Festival Walk (FW) and Gateway Plaza (GP), resulting in YoY gross revenue growth of 9.4% and 20.1% to S$54.1m and S$19.5m, respectively. For 9MFY15, gross revenue of S$204.9m represented an increase of 9.2%, forming 74.5% of our FY15 projection. DPU accelerated 10.6% to 4.815 S cents and constituted 76.1% of our full year forecast.
Underlying trends exhibit strength
Positive rental uplift of 21% and 32% was achieved at FW’s retail and GP’s office segments, respectively, as at 31 Dec 2014. 90% of MGCCT’s expiring leases (by lettable area) in FY15 have already been renewed or re-let. Overall portfolio occupancy stood at a healthy 99.4%, as at end Dec-2014, with full occupancy maintained at FW. Other encouraging signs include an estimated 4.4% and 5.1% YoY improvement in FW’s footfall and tenants’ sales to 11.9m and HK$1,597m, respectively, in 3QFY15. This was accomplished despite the challenging Hong Kong retail scene. We believe this exemplifies the solid positioning and resilience of FW.
Downgrade to HOLD on valuation grounds
Since our initiation on MGCCT with a ‘Buy’ rating in 3 Oct last year, its share price has jumped 13.3% (total returns of 16.8% if we include 1HFY15’s 3.162 S cents distribution). At current price level, we see limited potential total returns ahead. Hence, we downgrade MGCCT to HOLD on valuation grounds, with a marginally higher fair value estimate of S$1.01 (previously S$1.00) due to a slightly smaller unit base assumption. The stock still offers a decent FY15F and FY16F distribution yield of 6.2% and 6.4%, respectively.
Mapletree Greater China Commercial Trust (MGCCT) reported its 3QFY15 results which met our expectations. Gross revenue grew 12.0% YoY to S$73.6m, while DPU jumped 9.5% to 1.662 S cents. This robust set of performance was underpinned by sturdy rental reversions achieved at both Festival Walk (FW) and Gateway Plaza (GP), resulting in YoY gross revenue growth of 9.4% and 20.1% to S$54.1m and S$19.5m, respectively. For 9MFY15, gross revenue of S$204.9m represented an increase of 9.2%, forming 74.5% of our FY15 projection. DPU accelerated 10.6% to 4.815 S cents and constituted 76.1% of our full year forecast.
Underlying trends exhibit strength
Positive rental uplift of 21% and 32% was achieved at FW’s retail and GP’s office segments, respectively, as at 31 Dec 2014. 90% of MGCCT’s expiring leases (by lettable area) in FY15 have already been renewed or re-let. Overall portfolio occupancy stood at a healthy 99.4%, as at end Dec-2014, with full occupancy maintained at FW. Other encouraging signs include an estimated 4.4% and 5.1% YoY improvement in FW’s footfall and tenants’ sales to 11.9m and HK$1,597m, respectively, in 3QFY15. This was accomplished despite the challenging Hong Kong retail scene. We believe this exemplifies the solid positioning and resilience of FW.
Downgrade to HOLD on valuation grounds
Since our initiation on MGCCT with a ‘Buy’ rating in 3 Oct last year, its share price has jumped 13.3% (total returns of 16.8% if we include 1HFY15’s 3.162 S cents distribution). At current price level, we see limited potential total returns ahead. Hence, we downgrade MGCCT to HOLD on valuation grounds, with a marginally higher fair value estimate of S$1.01 (previously S$1.00) due to a slightly smaller unit base assumption. The stock still offers a decent FY15F and FY16F distribution yield of 6.2% and 6.4%, respectively.
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