Mapletree Industrial Trust

Mapletree Industrial Trust (MINT): Deutsche downgraded to Hold (TP $1.48), citing that current valuation has well reflected its strategy of unlocking value from its portfolio via AEIs, and its positioning as a beneficiary of policy changes. Although 3Q14 passing rates for flatted factories are 8% below market, and 4-5% below newly committed leases for Hi-Tech and Stack-up/Ramp-up buildings, MINT's organic growth capability may be capped, with the expectation of industrial rents falling between 0-3% in FY15 as industry supply ramps up. House notes that 20.3% of leases by rental income are due for renewal in FY16. MINT is now trading at 425 bps over the 10-yr bond, 122bps narrower than its long-term average yield spread, and 1.24x P/B vs. its long-term average of 1.25x. Deutsche believes that investors should switch from the REITs to the developers which trade at deep discounts to RNAV, given indications of inventory clearance in the high-end residential segment. Top picks are CDL, CapitaLand and Wing Tai.