• 2QFY15 DPU grew 3.3% YoY
• Positive rental reversions of 9%
• Accretive acquisitions made

2QFY15 results within expectations

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.

Overall portfolio occupancy rates slipped 0.4 ppt to 97.2%, its fourth consecutive quarter of QoQ decline. 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.

Four accretive acquisitions concluded YTD

MLT has concluded four accretive acquisitions in Malaysia, South Korea and China worth ~S$149m YTD (two were completed post 2QFY15 in China on 8 Oct), with NPI yields ranging from 7.5%-8.4%. This is attractive compared to its FY14 portfolio NPI yield of 6.3%, in our view. The four assets are funded wholly by debt, which will cause its aggregate leverage ratio to increase to 34.6%.

Maintain HOLD on muted outlook

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 and higher expenses from the continued conversion of its singletenanted assets to multi-tenanted buildings in Singapore. Nevertheless, we still expect rental reversions to remain positive, although the pace of growth would likely moderate. After updating our valuation model for our latest assumptions, our DDM-derived fair value remains unchanged at S$1.12. Maintain HOLD. In our view, valuations appear rich, with the stock trading at 1.23x FY15F P/B, which is approximately 0.5 standard deviation above its 10-year average forward P/B ratio of 1.07x.

Source: OCBC Research - 23 Oct 2014