Wednesday, January 29, 2014

Mapletree Logistics Trust -Strength to strength (DBSV)

Mapletree Logistics Trust
BUY S$1.035
STI : 3,133.76
Price Target : 12-Month S$ 1.16

•3QFY14 results in line; YTD net income is 77% of forecast
•Future growth to be driven by acquisitions/ developments, portfolio earnings remain resilient
•Maintain BUY rating and S$1.16 TP

Highlights
Resilient quarter fueled by strong rental reversions. Despite being hit by a weak JPY-S$ exchange rate, Mapletree Logistics Trust (MLT) reported resilient results – topline and net property income came in at S$78.1m (+0.9% y-o-y) and S$67.4m (-0.2% y-o-y) respectively. Forex losses were mitigated by strong rental reversions of up to 23% mainly for properties in Singapore and Hong Kong, and the acquisition of two properties in the year. Excluding the forex impact, topline would have grown by a stronger 4.8% y-o-y. Average portfolio occupancy remained steady at 98.4%. Distributable income grew 7.7% to S$45.0m (DPU 1.82 Scts), supported by a lower effective interest rate of 1.9%.


Most overseas income hedged. MLT has hedged up to 95% of its distribution derived from overseas. Most importantly, it has substantially hedged its JPY exposure for the next two years, and the impact of a weak JPY-S$ is likely to be delayed.  

Our Views
Acquiring property in Malaysia, will lift earnings from 2HFY15. MLT will be acquiring an industrial property in Iskandar Malaysia from its sponsor, Mapletree Industrial Fund, a closed end fund managed by Mapletree Investments. The total consideration of MYR88.5m (S$34.3m) is priced at an attractive 8.4% yield (vs 7.1% for its existing Malaysia portfolio) and at c.5% discount to the latest valuation. The property will be leased on a 12-year master lease to LCTH Corp, expiring in May ’20. This acquisition is in line with expectations (we forecast S$100m worth of acquisitions).

Being selective with future acquisitions. Given the current competitive market conditions, MLT will be selective with future acquisition opportunities and we believe a likely source to come from its sponsor’s pipeline. In addition, MLT will be starting on a development of another warehouse project at Toh Guan, which is expected to contribute positively in the medium term.

Recommendation
Attractive yield; BUY, TP S$1.16. We nudged up earnings after imputing lower interest rates. We like MLT for its attractive yields of 7.1%-7.2%, supported by strong underlying fundamentals.


Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 22/01/14

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