Mapletree Logistics Trust’s (MLT) 3QFY17 results came in within our expectations. Gross revenue and NPI grew 7.4% and 7.7% YoY to S$95.5m and S$79.9m, respectively. Growth was underpinned largely by income from four acquisitions in Australia, Malaysia and Vietnam, contribution from properties which have completed their redevelopment, and higher revenue from existing properties in Hong Kong. However, DPU came in flat YoY at 1.87 S cents due to higher management fees, borrowing costs, distribution to perpetual securities holders and an enlarged unit base.

On a 9MFY17 basis, MLT’s gross revenue rose 5.8% to S$276.7m and accounted for 74.7% of our FY17 forecast. DPU of 5.58 S cents was unchanged from the same period in the preceding year and formed 75.6% of our full-year forecast.

Operationally, MLT’s occupancy was slightly lower from 96.4% (as at 30 Sep 2016) to 96.1%, while positive average rental reversions of 2% were achieved. This ranged from 1% (Singapore and Vietnam) to 4% (Hong Kong and China).

Looking ahead, management expects the leasing environment to remain challenging, with continued pressure on occupancy and rental rates. We will provide more updates after the analyst conference call. Maintain HOLD on MLT, with our S$1.05 fair value under review.

Source: OCBC Research - 24 Jan 2017