Mapletree Logistics Trust (MLT) reported a 3.3% YoY increase in its 2QFY15 DPU to 1.88 S cents on the back of a 5.8% growth in its gross revenue to S$81.5m. This was driven by contributions from its redevelopment project Mapletree Benoi Logistics Hub, higher revenue from existing assets in Singapore and Hong Kong, but partially offset by lower occupancy at several of its newly converted multi-tenanted buildings in Singapore. For 1HFY15, revenue and DPU grew 6.6% and 4.4% to S$162.5m and 3.78 S cents, respectively, both of which formed 49.4% of our FY15 forecasts. We view this set of results as in-line with our expectations.

Although MLT managed to achieve positive average rental reversions of 9% for leases renewed in 2QFY15, the outlook remains muted. This is attributed to the sluggish macroeconomic environment, tighter regulatory landscape in Singapore, and cost pressures from the continued conversion of its single-tenanted assets to multi-tenanted buildings in Singapore. We thus maintain HOLD on MLT. We will review our fair value estimate of S$1.12 after the analyst briefing to be held later.

Source: OCBC Research - 21 Oct 2014