STI : 3,067.57
Price Target: 12-Month S$1.16
Strength in diversity
• Steady earnings growth from an expanding portfolio
• Ready acquisition opportunities from sponsor
• BUY, TP S$1.16
Steady earnings growth from an expanding portfolio. Supported by a diversified portfolio located across Asia offering resilient income streams, Mapletree Logistics is expected to continue to deliver growth through a myriad of initiatives. Firstly, the manager expects rental reversions to remain positive, albeit at a more moderate rate in the coming year, given robust demand for space. In addition, MLT will start recognizing income contribution from the completed Mapletree Benoi Logistics hub (S$100m investment, ROI of 8%).
Acquisition opportunities from sponsor. The manager sees limited 3rd party acquisition opportunities, given the strong competitive environment. However, the trust stands ahead of peers from a visible pipeline of assets available from is sponsor, Mapletree Investments. A low gearing of 34% implies a debt-funded headroom of up to S$500m (up to 40%), although we believe the trust is unlikely to approach that level. We have assumed S$100m in acquisitions in our forecasts, fully funded by debt.
BUY maintained, TP S$1.16. At 1.1x P/BV, both forward yields of 6.7-7.1% and current entry levels are attractive.
Publish date: 19/12/13