- FY3/15 DPU in line.
- Interest costs well managed but rising, nonetheless.
- Maintain HOLD with unchanged DDM TP of SGD1.43 (CoE 7.7%, LTG 2%).
FY3/15 revenue was SGD282.5m (+5.7% YoY) while NPI was SGD211.7m (+8.4% YoY), smack in line with our expectations of SGD282m and SGD212m respectively. Full-year DPU was 8 SGD cts, ahead of our 7.7 cts. Management said NPI could have been stronger if not for higher-than-expected property expenses. As retail demand remains weak, MCT is helping its tenants. Measures include sharing some property-operating costs with tenants. Retail rental reversions remain robust at 17.5%, testament to Vivocty’s unique positioning as a tourist mall with exclusive local catchment. On the office front, Mapletree Anson’s occupancy dropped from 93.8% to 87.5%, given strong supply in the CBD/Tanjong Pagar. Thankfully, the dropped space has since been pre-committed. Occupancy for the rest of its assets was also stable.
Interest costs rising
MCT refinanced SGD288.6m of debt in April, which raised its all-in interest costs to 2.28% from 2.18% in Dec 2014. The move wipes out refinancing needs for FY3/16. For FY3/17, SGD354m debt coming due may be refinanced at higher costs yet again. We have already incorporated this.
Maintain HOLD; upside risk from acquisitions
Though we are positive on MCT’s management and portfolio, valuations are rich at <5% yield. Maintain HOLD with an unchanged DDM TP of SGD1.43 (CoE 7.7%, LTG 2%). Upside risks could include acquisitions from its sponsor’s attractive pipeline of assets – Mapletree Business City, Harbourfront Centre and Towers 1 & 2.
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