MapletreeLog sees strong 3Q19 results as rental reversions gather pace

SINGAPORE (Jan 23): Mapletree Logistics Trust (MLT) reported 3Q19 gross revenue and Net Property Income (NPI) jumped 23% and 25.9% y-o-y to $120.8 million and $104.5 million, respectively.

This was driven by organic growth, contribution from the completed redevelopment of Mapletree Ouluo Logistics Park Phase 1 and acquisitions.

DPU grew at a smaller 5% y-o-y to 2.002 cents as a result of higher borrowing costs and a larger unit base.

In a Tuesday report, OCBC Investment Research analyst Wong Teck Ching says MLT reported a strong set of 3Q19 results which was the strongest y-o-y growth delivered by MLT since 1QFY15 and met the research house’s expectations.

On a 9M19 basis, MLT’s NPI rose 17.3% to $284.5 million which constituted 73.5% of OCBC’s FY19 forecast.

DPU of 5.917 cents also represented growth of 4.2%, which accounted for 74.6% of OCBC’s full-year projection.

Besides MLT’s healthy DPU growth, Wong says rental reversions also gathered pace during the quarter, driven largely by Hong Kong, China, Singapore and Vietnam.

Its portfolio occupancy held firm at 97.7%, with only China recording a dip in occupancy rates from 98.3% to 95.8%.

While already having a presence in Australia, MLT made its maiden entry into the Brisbane logistics market with the acquisition of the Coles Distribution Centre warehouse with an expected NPI yield of 5.7% on Nov 28 2018.

It also completed the acquisition of Wonjin Logistics Centre in South Korea with an expected initial NPI yield of 6.5%.

In addition, MLT had also entered into an agreement with Unilever International to acquire a warehouse in Vietnam-Singapore Industrial Park I, Binh Duong province, Vietnam for $43 million, which is expected to generate an initial NPI yield of 8.3%.

“Incorporating these acquisitions, we raise our FY19 and FY20 DPU forecasts by 0.2% and 2.2%, respectively, and consequently our fair value estimate from $1.37 to $1.40,” says Wong.

OCBC is maintaining MLT at “buy” with $1.40 fair value with FY19F DPU yield of 5.6%.

Meanwhile, Maybank KimEng analyst Chua Su Tye expects 4Q to be lifted by further contribution from its acquisition of five Singapore properties that was completed on Sept 28 2018.

In a Tuesday report, Chua says portfolio occupancy was steady at 97.7% with q-o-q improvements across Singapore, Hong Kong and South Korea. Its China properties reported lower occupancies, as JD.com downsized its space needs but this should improve in subsequent quarters from backfilling efforts from SMEs at higher rentals.

In Hong Kong, reversions are expected to remain positive while the outlook for Japan is to remain stable with demand in Australia supported by domestic consumption and demand in Vietnam staying robust over the next 6-12 months by spillover gains from the ongoing China-US trade conflict.

MLT remains optimistic on the Chinese logistics market, but will be selective on deals and cautious on the performance of its older assets in Singapore and S.Korea. Demand for newer high-specs logistics properties in Singapore however remain tight against expansion activities including by the likes of Amazon.

Maybank has a “hold” on MLT with $1.30 target price and FY19E DPU yield of 6.1%.

As at 3.26pm, units in MLT are down 1 cent at $1.33.