Tuesday, January 21, 2014

Mapletree Logistics Trust - First acquisition of the year (CIMB)

Mapletree Logistics Trust
Current S$1.05
Target S$1.11
First acquisition of the year

▊ Amid a tight acquisition market, MLT recently announced its proposed acquisition of an industrial warehouse in Iskandar Malaysia – its fourth property in this area upon completion. Although we are positive on the deal, the impact on earnings is expected to be limited. We maintain our Hold rating and DDM-based (discount rate: 8.1%) target price.

What Happened
MLT recently announced its proposed acquisition of an industrial warehouse in Iskandar Malaysia from Mapletree Industrial Fund for RM88.5m (S$34.3m). This property comprises seven blocks of single- and double-storey industrial warehouses and one office block with a total GFA of 63,750 sq m. At the moment, the property is leased to a subsidiary of LCTH Corporation Bhd on a 12-year triple net lease, expiring in May 2020. At RM88.5m, this acquisition is expected to generate an initial NPI yield of 8.4% and shall be MLT’s fourth asset in Iskandar. Management highlighted that this acquisition will be funded by debt and is expected to be completed by 3QFY14/15.  
What We Think
In view of the tight acquisition market in Singapore, we view this deal positively as MLT continues to receive support from its sponsor. The acquisition price is lower than the valued price of RM91m-95.4m, while the initial yield of 8.4% is higher than the implied property yield of 7.1% for MLT’s existing Malaysian portfolio. Based on our estimates, debt-funding for this acquisition is expected to bring about growth in dividend of 0.085 Sct/share (+1.2% from FY13 DPU) on a pro-forma basis. Upon completion, MLT’s leverage is expected to rise to a manageable 34.9%.  
What You Should Do
This acquisition forms part of our estimated debt-funded acquisition target of S$150m for FY14. Given the size of the deal, we expect limited impact on FY14/15 earnings. We continue to recommend a Hold as we await for more meaningful catalysts.  

Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 13/01/14

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