Mapletree Logistics Trust – Stable performance QoQ

Excerpts from CGSCIMB report

Mapletree Logistics Trust (SGX: M44U)

• 3QFY24 DPU of 2.253 Scts is broadly in line at 26.2% of our FY24F forecast.
• MLT expects China rent reversions to remain negative; meanwhile, it continues to execute on its asset recycling strategy to rejuvenate its portfolio.

Reiterate Add rating with an unchanged TP of S$1.88.

3QFY3/24 results highlights

Mapletree Logistics Trust (MLT) reported a 2.1% yoy rise in 3Q revenue to S$184m while NPI grew 1.5% yoy to S$159.5m. The better performance was underpinned by higher contributions from Singapore assets and income from recent acquisitions. 3QFY24 DPU of 2.253 Scts was broadly in line at 26.2% of our FY24F forecast. 9MFY24 was 79.1% of our forecast.

Slight dip in portfolio occupancy, challenging environment in China

MLT’s portfolio occupancy dipped 1% pt qoq to 95.9% at end-3QFY24, due to a decline in Singapore, HK SAR and Malaysia occupancies. Overall rental reversion of +3.8% was achieved in 3Q, with rental reversions ranging from 5.1% to 9.1%, partly offset by -9.4% rental reversion in China, mainly in Tier 2 cities. Excluding China, rental reversions would have averaged +6.2%. Management guided for overall positive rental reversion for its portfolio, although negative rental reversions in China are likely to persist over the next 6-12 months. MLT has a remaining 7.6% and 29.9% of leases due to be re-contracted in 4QFY24F and FY25F, respectively.

MLT continues to execute on its asset recycling strategy

MLT’s gearing was stable at 38.8% at end-3QFY24. Adjusted interest coverage ratio remained healthy at 3.2x. Management guided that average interest rate could trend up from 2.5% in 3Q to c.2.9% in FY25F. An estimated 83% of its debt is hedged into fixed rates and 80% of distributable income hedged into S$ in the next 12 months. Management guided that it is looking at both acquisition and divestment opportunities, although it does not expect to undertake any equity fund raising exercises over the next 12 months. In terms of acquisitions, it said it could potentially look at Malaysia, Vietnam and India. These could likely be partly funded by divestment proceeds. In Nov 2023, MLT announced the acquisition of a Grade A logistics warehouse in Farukhnagar, India for S$14.5m and divestment of two assets in Malaysia for S$43.8m. In the meantime, it is undertaking two accretive redevelopment opportunities in Singapore and Malaysia.

Valuation/Recommendation

We keep our FY24-26F DPU estimates unchanged. We have not baked in any pre-emptive new acquisitions or divestments into our current estimates. Our DDM-based TP is maintained at S$1.88. You can find the full report here and the company website here.