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Author: kimeng   |   Latest post: Wed, 22 May 2019, 9:02 AM

 

Mapletree Logistics Trust: No Impact for Now From CWT Pte Ltd

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Based on a Hong Kong stock exchange filing by CWT International Limited (521 HK; CWTI; nonrated), it was disclosed that CWTI had failed to pay accrued interests and certain fees aggregating ~HK$63m to its lenders which have become due and payable under its facility agreement entered into for the advancement of a loan in the principal amount of HK$1.4b.

Given that a default has occurred under the facility agreement, the lenders have declared that all amounts accrued or outstanding under the facility agreement be immediately due and payable, and that the security relating to the facility agreement has become enforceable.

CWT Pte Ltd (CWTPL), a wholly-owned subsidiary of CWTI, is currently the largest tenant of Mapletree Logistics Trust (MLT). CWTPL contributed 9.1% of MLT’s gross revenue for 3QFY19.

Based on an announcement by MLT, CWTPL has not defaulted on its rental payments under the various lease agreements with MLT and there are no arrears due from CWT. Approximately 30% of the gross revenue from CWTPL is also contributed by third party endusers.

In the event of a default, we believe MLT will be able to go directly to the end-users to negotiate fresh leases and mitigate any downtime. Furthermore, MLT currently holds security deposits of six months of rental in relation to the leases with CWTPL.

Hence, any impact is likely limited for now, in our opinion. Pending its upcoming 4QFY19 results, we put our BUY rating and S$1.50 fair value estimate on MLT under review.

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Source: OCBC Research - 17 Apr 2019

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