Analyst briefings: Mapletree Logistics Trust fiscal 1Q earnings

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Analysts weigh in on Mapletree Logistics Trust’s fiscal first quarter earnings report.

Mapletree Logistics Trust Monday reported its fiscal first-quarter net property income increased 18.2 percent on-year to S$106.13 million on contributions from the completed redevelopment of Mapletree Ouluo Logistics Park Phase 1 and acquisitions.

The increase was partially offset by the divestment of five Japan properties in April and two Singapore properties in the previous fiscal year, the trust said. It also pointed to the impact of a weaker Australian dollar, Chinese yuan and South Korean won.

CGS-CIMB

CGS-CIMB said the results were in line with its expectations, marking 25 percent of its full-year forecast.

The trust’s portfolio quality could keep rental reversions positive, the brokerage said in a note Tuesday, adding that the fiscal first quarter’s 1.8 percent rental reversion market the 12th straight quarter of positive reversions.

“While sentiment in major transshipment hubs like Singapore and Hong Kong was dampened by the trade war, MLT expects its ramp-up properties to remain resilient and continue showing positive, albeit less aggressive, rental reversions,” the brokerage said.

CGS-CIMB said it tweaked its fiscal 2020-22 distribution per unit (DPU) forecasts on expectations of a more muted leasing environment in Singapore and Hong Kong. That drove a trim to its target price to S$1.55 from S$1.56.

It kept a Hold call on MLT, saying the trust trades at an elevated 1.4 times price-to-book and a 5.0 percent yield, compared with historical averages of 1.1 times and 6.5 percent, respectively.

DBS

DBS called the results “a class act,” with steady operating metrics supporting its view that MLT will continue to ride on a strengthening market.

The bank pointed to the trust’s divestments during the quarter and in the previous fiscal year.

“With an active pipeline from the sponsor and a myriad of opportunities from third parties, we believe that the manager will be keen to re-invest the proceeds and utilise its debt headroom to drive accretive acquisitions,” DBS said in a note Wednesday, adding it was pricing S$500 million of deals into its forecasts.

The bank noted MLT is looking at opportunities in key markets and potential forward-purchase deals, or development projects, in markets, such as Australia and South Korea, where its sponsor doesn’t have a pipeline.

DBS kept a Buy call with S$1.85 target price.

Maybank KimEng

Maybank KimEng said the results were in line with its forecasts, but it pointed to reasons for caution ahead.

“Management adopted a more cautious tone in view of macro headwinds, as tenants hesitate on renewals and capacity expansion, especially in Singapore and Hong Kong,” the brokerage said in a note Tuesday.

Maybank KimEng said it expected Mapletree Logistics Trust’s diversified portfolio, which includes deals in the previous fiscal year, would cushion macro uncertainties.

“We continue to expect a pick-up in rents only from 2020, supported by easing supply. MLT remains optimistic on the logistics market in China, Malaysia and Vietnam, and also selective about acquisitions from its sponsor,” the brokerage said.

It raised its target price to S$1.55 from S$1.40 on a lower risk-free rate, but kept a Hold call, citing limited catalysts.

Daiwa

Daiwa said the results were in line with its expectations.

“With no surprises, we reiterate our Sell (5) rating,” the investment bank said in a note Monday. Daiwa has a S$1.25 target price for the trust.

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