Mapletree Logs Trust

Mapletree Logs Trust: 3QFY15 in line with expectations, NPI rose 3.1% y/y and 1.2% q/q to $69.5m, lifts DPU by 1.6% y/y to 1.87cents (from 1.84cents), which yields 6.1% on last close. Revenue climbed 6.2% y/y to $82.9m on contributions from six new properties in China, Singapore (Mapletree Benoi Logistics Hub), Malaysia and Korea and higher revenue from existing assets, offset by lower occupancy at buildings newly converted from single-tenanted to multi-tenanted and absence of revenue from Toh Guan property undergoing redevelopment. Amidst a fast depreciating Yen environment, MLT’s net exposure to JPY cost almost 1pp in gross revenue growth, despite more than 90% of income stream already hedged. FX translation Q/q, revenue expanded 1.7% with the addition of two assets in China, one in Korea and one in Singapore. Portfolio occupancy declined from 98.4% in Dec13 and 97.2% in Sep14 to 96.9% in Dec14, mostly due to new assets and down-time from conversion of existing asset. Despite so, we believe vacancy risk is low. 78% of the 18% leases expiring in 2015 are already pre-leased (vs 51% last quarter) and portfolio WALE by NLA is 4.4 years, 42% of which is expiring in FY18/19 and beyond. Rent reversions were positive at about 9% for Singapore and HK. More than 90% of distributable income is hedged, relatively sheltered from the volatility and uncertainty in global currency market, the main concerns being JPY and KRW exposure. Capital management is healthy, leverage increased from 33.1% to 34.6% to fund acquisitions but remains well below the 45% guidance by MAS, giving it debt headroom for further acquisitions. Approx. 76% of debt is fixed or hedged from interest rate risks, a 100bp hike in base rates will see DPU falling ~2%. Latest broker ratings: Credit Suisse reiterates Outperform with TP $1.47 OCBC reiterates Hold with TP $1.12