Mapletree Logistics Trust’s (MLT) 4QFY17 results came in within our expectations. Gross revenue and NPI grew 9.1% and 10.5% YoY to S$96.5m and S$80.3m, respectively.

This 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.

Consequently, DPU rose 3.3% YoY to 1.86 S cents, as growth from the aforementioned factors was partially offset by an increase in borrowing costs and higher distribution to perpetual securities holders.

For FY17, MLT’s gross revenue jumped 6.6% to S$373.1m and accounted for 99.9% of our forecast. DPU of 7.44 S cents was an improvement of 0.8% and was 0.6% above our projection.

Operationally, MLT’s performance has shown signs of stabilising, with portfolio occupancy of 96.3% (+0.2 ppt QoQ). Australia, which has been one of MLT’s key focus markets, recorded full occupancy, as at 31 Mar 2017. The weighted average rental reversion for leases renewed in 4QFY17 came in at 0.4%.

Looking ahead, only 2.9% of MLT’s NLA expiring in FY18 pertains to single-user assets (SUA). This reduction in concentration risk can be attributed to management’s proactive leasing approach.

In terms of financial position, MLT’s aggregate leverage stood at 38.5%, as at endFY17, with ~81% of its debt hedged. We will provide more updates after the analyst briefing.

Maintain HOLD on MLT, with our S$1.06 fair value under review.

Source: OCBC Research - 28 Apr 2017