Mapletree Industrial Trust’s (MIT) share price has softened 3.5% since its YTD peak on 2 Jun this year, versus the FTSE ST REIT Index’s 0.6% gain. We believe this pullback presents buying opportunities for investors, as we expect MIT to register a robust 4.9% growth in DPU in FY18.

MIT also recently announced its proposed divestment of its 65 Tech Park Crescent property for S$17.7m to Concrete Innovators Co. Pte. Ltd, slightly above its latest valuation of S$17.6m (as at 31 Mar 2017) but significantly above its purchase price of S$13.2m.

We are positive on this transaction as the 10-year master lease with Metech International Ltd at this single-user building will be expiring in Nov this year, and there would likely be efficiency loss and downtime if the property was converted to a multi-tenanted building.

Meanwhile, Singapore’s electronics exports jumped 23.3% YoY for the month of May, strongly beating consensus’ expectations. We believe this augurs well for MIT’s outlook.

Supported by a healthy FY18F distribution yield of 6.6%, we reiterate BUY on MIT with an unchanged fair value estimate of S$1.93.

Source: OCBC Research - 20 Jun 2017