Mapletree Logistics Trust: There could still be some execution risks over the next 12-18 months due to the transitional conversions of single-user assets (SUAs) to multi-tenanted buildings (MTBs) in SG, leading to a temporary increase in vacancy rates and a decline in NPI margins. Returns and income contributions from its major redevelopment projects such as 5B Toh Guan Road East and 76 Pioneer Road could be adversely affected if industrial leasing market deteriorates in the coming quarters.
Daiwa believes investors should not pile into MLT yet and they maintain their HOLD rating despite MLT 9% unit-price correction and underperformance. The house is also cutting their DPU forecasts and lower TP to $1.17 from $1.20. The DPU forecasts are revised down after incorporating higher assumptions for 1) interest expense, 2) taxation and 3) number of units outstanding in subsequent years.
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