MINT: Maybank-KE upgrades Mapletree Industrial Trust to Buy from Hold, citing its resilience while waiting for growth from the Hewlett Packard BTS to kick-in in 2018.
Mapletree Industrial Trust has a 33% exposure business parks and high-spec space (similar to biz park in fittings). JTC data showed that 2015 demand for business-park space (2.4m sf) outstripped supply (1.9m sf), in what was a strongly supplied year (+10.1% supply) amid weak economic conditions. The more resilient biz park and high-spec space is projected to form 42% of portfolio by FY3/19.
Meanwhile, the house also notes that occupancy has been rising over the last four quarters (3QFY16: 94.7%), and expects this to be largely maintained in FY3/17e (est: 93.5%). This is as expected occupancy increases in business parks could be offset by dips in factory occupancy amid an oversupplied market.
The HP BTS contributions is expected to boost FY3/18e DPU by 9.1% to reach 12¢, in turn implying MINT is currently trading at a 7.8% yield.
Maybank-KE raises its target price to $1.71 from $1.50, based on a tightened 7% yield target from 7.25%, reflecting MINT’s quality portfolio.
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