Share Price S$1.10
Target Price S$1.29
1QFY14: Stable Performer
Results in line with expectations as the impact of yen depreciation on revenue and NPI was fully hedged, while borrowing costs fell 20% qoq due to lower average interest rates (down 50bp qoq). In 1QFY14, MLT acquired a S$32m property in Korea and we anticipate more acquisitions in the year ahead as MLT has over S$250m headroom. Maintain BUY with unchanged target price of S$1.29 based on DDM (RR: 6.9%, terminal: 1.5%).
• Results in line with expectations. Mapletree Logistics Trust (MLT) reported 1QFY14 distributable income of S$48.7m (+6% yoy, +16% qoq) or a DPU of 1.80 S cents (+6% yoy, +4%qoq). 1QFY14 DPU of 1.80 S cents (inclusive of divestment gains of 0.02 S cent) is in line with our expectations, accounting for 25.3% of our full-year DPU estimate of 7.1 S cents. Net S$4.96m gain from divestment of 30 Woodlands Loop will be distributed over eight quarters. This translates into S$0.6m per quarter or about 2.5 S cents per unit.
• Revenue down on yen depreciation but impact mitigated by hedges. 1QFY14 revenues fell 2% yoy due to the depreciation of the yen offset by positive rent reversions, while NPI fell 3% yoy due to higher operating costs from conversion of single-user assets into multiuser facilities and also higher term contract rates. The impact of the dip in revenues and NPI was mitigated by income hedges. MLT has hedged 90% of its FY14 distributable income.
• Borrowing costs fell by 20% qoq led by lower interest rates, which were down 0.5ppt qoq to 1.9%, due to new interest rate swaps and fixed rate notes of 4-7 years tenor entered into during the quarter to replace expiring interest rate hedges. MLT enjoys lower interest costs as 70% of its debt is denominated in the yen.
• Portfolio occupancies dipped 0.3ppt qoq to 98.2% due to lower occupancies in China (down 2.9ppt to 95.6%), while leases renewed during the quarter registered a 17% positive rental reversion, largely due to new leases in Hong Kong and Singapore. MLT has renewed 33% of the leases due to expire in FY14.
• Strong 94% pre-commitments for Mapletree Benoi Logistics Hub (fmr 21/23 Benoi Sector), which is ahead of former indications of 60-80% pre-commitments. In June, MLT had announced that Menlo Worldwide Logistics will commit to over 50% of space at the facility. Upon completion in 4Q13, the project will yield a GFA of 1m sf, up four-fold from 250,000sf previously. The balance of the building remains under advanced negotiations.
• S$32m acquisition of The Box Centre in South Korea for KRW28.75b (S$32m) completed in July at a NPI yield of 8.4%. This is a modern 300,000sf warehouse completed in Mar 12 located approximately 60km from Seoul. MLT’s gearing is expected to increase to 34.6% (~39% inclusive of perpetual securities) post-acquisition, which leaves a potential debt headroom of S$250m before reaching a gearing of 45%.
• Stable and resilient portfolio with a weighted average lease expiry of 5.1 years and diversification across geographies and customers. Pipeline from sponsor Mapletree Investments remains significant at over S$400m.
• Maintain BUY with an unchanged target price of S$1.29, based on DDM (required rate of return: 6.9%, terminal growth: 1.5%).
Share Price Catalyst
• Positive newsflow on rising industrial rentals and capital values, yieldaccretive acquisitions, redevelopment or build-to-suit opportunities
• Redevelopment and asset enhancement plans for portfolio properties.
Source/Extract/Excerpts/来源/转贴/摘录: UOB Kay Hian research