Mapletree Log Trust

Mapletree Log Trust: 1QFY14 results in line, distributable income gained 6.9% y/y to $44m and DPU rose 6.4% to 1.8¢. NPI fell 3.3% y/y to $65.3m due to a weaker JPY and higher property expenses incurred from conversions to multi-tenanted buildings. This was offset by lower interest expense (-28% y/y) from the weaker JPY, positive portfolio rental reversions (+17% y/y), full contribution from Mapletree Wuxi which was acquired in Jan 2013, and additional 0.2¢ distribution from the gain of divestment of 30 Woodlands Loop. Portfolio occupancy dip slightly to 98.2% (-0.3 ppts) due to China's portfolio which fell to 95.6%. Gearing was maintained at 34% with average term of debt at 4 years and cost of debt at 1.9%. Assuming 45% gearing target and management’s comfortable range of 40–50%, CS estimate MLT has >$700m debt headroom for future acquisitions. Management continues to deliver accretive acquisitions, with recent purchase of The Box Centre in S.Korea at an initial NPI yield of 8.4%. Meanwhile, 21 Benoi Sector redevelopment project is on track for completion in 3Q and has healthy pre-commitment levels of 94%. NAV per unit of $0.92. Stock currently yields 6.5% Broker recommendations: Maybank KE maintain HOLD with TP of $1.05; CS maintain OUTPERFORM with TP of $1.42; DB maintain HOLD with TP of $1.24;