Mapletree Logistics Trust

Mapletree Logistics Trust (MLT) 3Q14 results came in within estimates, with 3Q14 DPU at 1.84¢ (+7% y/y, +1% q/q), lifting 9M14 DPU to 5.46, up 6%. (DPU included a partial distribution of the gain from divestment of 30 Woodlands Loop amounting to $0.6m or 0.025¢ in DPU per quarter) Gross revenue and net property income (NPI) was up 1% and flat y/y at $78.1m and $67.4m respectively. This was achieved despite lower revenue from the group’s Japanese portfolio, on back of a weaker Japanese Yen. Excluding forex impact, gross revenue would have increased by 5% and NPI by 4%, led by positive rental reversions in Singapore and Hong Kong, and contributions from two acquisitions completed in the past year. With the income streams from Japan substantially hedged, the impact of the weaker Japanese Yen on distributable income was mitigated, while a 23% y/y fall in borrowing costs due to lower average interest rates also contributed positively to the quarter’s performance. Going forward, MLT notes that while uncertainties about the strength and sustainability of the global recovery remains, demand for logistics facilities in the Asian markets is expected to remain robust. Aim to adopt a disciplined approach towards selective acquisitions and asset enhancement initiatives while maintaining a prudent capital structure. Overall, MLT fundamentals remain vibrant with occupancy rate at a healthy 98.4%, while its Weight Average Lease Expiry (WALE) stood at a comfortable 4.8 years. Forex risk has been largely mitigated with ~95% of the group’s income stream hedged for FY14. Meanwhile net-gearing stands at a comfortable 33.9%, providing further debt headroom for expansion. At the current price, MLT REIT trades at an annualized 9MFY14 7% yield and 1.14x P/B versus the Industrial REITs average of 7.9% forward yield and 1.05x P/B. Latest broker ratings as follows: CIMB maintains Hold with TP $1.11 CS maintains O/p with TP $1.42 Deutsche maintains Hold with TP $1.18 OCBC maintains Hold with TP $1.06