• 3QFY14 DPU rose by 7.0% YoY
• Focus on lease and asset management
• Initiatives in place to sustain performance

3QFY14 results met expectations

Mapletree Logistics Trust (MLT) reported a consistent set of 3QFY14 results last evening. NPI saw a marginal drop of 0.2% YoY to S$67.4m, dragged down by weaker JPY. Excluding the forex impact, NPI would have grown by 3.6% on the back of higher renewal rents in Singapore and Hong Kong, and new income streams from Mapletree Wuxi Logistics Park and The Box Centre. Impact of depreciating JPY on bottomline, however, was mitigated as contributions from Japan are substantially hedged. Together with a 22.9% decrease in borrowing costs and divestment gain of S$0.6m, amount distributable to unitholders rose by 7.7% to S$45.0m. As such, DPU similarly grew by 7.0% to 1.84 S cents. This brings the 9MFY14 DPU to 5.46 S cents, meeting 75.2%/76.9% of our/consensus full-year projections.

Portfolio metrics remained sturdy

Portfolio occupancy stood at 98.4%, representing a slight QoQ drop of 0.3ppt. This, we note, was due to the conversion of two single-user assets into multi-tenanted buildings in Singapore. That aside, operational performance remained sturdy, as evidenced by robust rental reversions of 23% and healthy leasing activities (84% of FY14 leases renewed to-date vs. 62% a quarter ago) achieved at its portfolio. Management reiterated that active lease and asset management will be a key priority going forward in light of the supply of warehouse space in 2014 and impending conversion of more single-user assets into multi-tenancies (which may result in occupancy dip).

Maintain HOLD

MLT also confirmed our view that competition for acquisition of logistic assets is becoming increasingly intense. Nevertheless, given that MLT’s recent initiatives, such as 1) completion of redevelopment of Mapletree Benoi Logistics Hub and Phase 1 solar panel installation at its Japan assets, 2) upcoming redevelopment of 5B Toh Guan Road East and Phase 2 solar panel installation, and 3) proposed acquisition of warehouse in Iskandar Malaysia, are like to contribute positively to MLT’s income, we believe MLT’s performance will remain robust in FY15. Maintain HOLD with unchanged fair value of S$1.06.

Source: OCBC Research - 21 Jan 2014