Mapletree Industrial Trust

Mapletree Industrial Trust: Reported 3Q11 results, which were above expectations. DPU of 1.52c, +13.4% vs forecasted DPU of 1.34c. The better than expected DPU was due to higher than expected rental rev as well as lower than expected utility cost and tariff. Distributable income for the period also included a one-off item amounting to approximately $0.8m. If excluded, DPU would be1.46c, still above grp’s orignal forecast….

Grp appears on track to fulfil organic growth plans, registering rental renewal increases, averaging 21.9% and maintained retention of 81% in 3Q11, while average rental at business parks saw a 50% jump in average rental to $3.23 psf. Average rental at its flatted factories and its stack-up/ramp-up segment increased by 13%. Overall 99.3% of leases were renewed at the maximum cap….

Portfolio occupancy rose to 92.3% from 91.2% in 2Q11, while passing rental was $1.45psf vs $1.44 in 2Q11 and $1.40psf in 1Q11. Currently, grp has announced a $2.9m asset enhancement initiative (AEI) in its Redhill property to convert 35,000 sq ft of flatted factory space for e-business usage….

Portfolio occupancy rose to 92.3% from 91.2% in 2Q11, while passing rental was $1.45psf vs $1.44 in 2Q11 and $1.40psf in 1Q11. Currently, grp has announced a $2.9m asset enhancement initiative (AEI) in its Redhill property to convert 35,000 sq ft of flatted factory space for e-business usage….

We note that grp’s balance sheet remains strong, with Net gearing at 53.2% and an interest coverage of 6.1x, while at current price, grp trades at 1.1x FY11E P/B, with a forecasted FY11 dividend yield of 6.6%, vs Ascendas REIT of 1.6x FY11E P/B & yield of 6.4% and Mapletree Logistics Trusts of 1.1x P/B & yield of 6.6%. Citi has Buy Call with $1.25 TP.