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Singapore’s Next Blue Chip Idol: Mapletree Logistics Trust

Chin Hui Leong

There are 30 blue-chip companies in the Straits Times Index (SGX: ^STI), but not all blue-chips can maintain their coveted position.

In September, the co-creators of Singapore’s stock market benchmark, the STI, announced some changes to the index as part of their routine review to ensure that the companies in the index continue to meet its requirements. Together with announcing changes, they also revealed the new STI reserve list.

Companies on the reverse list will replace any STI component that becomes ineligible due to corporate actions before the next review. One company on this new list is Mapletree Logistics Trust (SGX: M44U).

A Closer Look

Mapletree Logistics Trust was the first Asia-focused logistics REIT to be listed on the Singapore market back in 2005. The REIT’s portfolio is made up of 124 properties located across 8 countries, namely: Singapore, Japan, Hong Kong, South Korea, China, Australia, Malaysia and Vietnam. At current prices, the REIT has a market capitalisation of S$4.01 billion.

Having been listed on the market for the past 13 years, there is quite a bit of history that we can dig into.  First off, let’s take a look at the REIT’s distributable income and distribution per unit.

Source: Mapletree Logistics Trust’s Annual Report

Mapletree Logistics Trust’s distributable income and distribution per unit(DPU) can be best described as stable over the past five years. Over the last five fiscal years, distributable income has increased from S$179.7 million to S$212.9 million, implying a compound annual growth rate (CAGR) of 3.45%. DPU has grown much slower with a CAGR of 0.72% over the past five years. The difference in growth rates is due to the REIT raising capital by issuing new units to finance acquisitions.

Next, let’s look at the REIT’s debt profile.

Source: Mapletree Logistics Trust earnings presentation

Mapletree Logistics Trust’s total debt stood at S$2.51 billion as of 31 March 2018, and the REIT had an aggregate leverage ratio of 37.7%.

The REIT’s average debt duration stood at 4.5 years, with the financing interest rate at 2.4%. Meanwhile, 78% of the debt was either on a fixed rate or hedged. Mapletree Logistics Trust also has an interest cover ratio of 5.6 times which suggests it should be able to meet its interest payments. It is also worth noting that Mapletree Logistics Trust has no debt left to refinance for the fiscal year ended 31 March 2018 (FY 18/19).

Source:  Mapletree Logistics Trust’s annual report

To close, we can look at the Mapletree’s net asset value (NAV). From the graph above, we can see that the NAV has grown from S$0.97 in FY13/14 to S$1.10 in FY17/18 implying a CAGR of 3.2%.

As a whole, while Mapletree Logistics Trust has experience several years of stagnant growth, the REIT appears to have picked up on its growth rate over the past year. Time will tell if the growth can continue.

More reading

The Motley Fool Singapore contributor Esjay contributed to this article. Esjay does not own any of the shares mentioned.

The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore writer Chin Hui Leong owns shares of Mapletree Logistics Trust.