Mapletree Logistics Trust (MLT) reported its 3QFY18 results which met our expectations. Gross revenue and NPI grew 2.8% and 3.9% YoY to S$98.2m and S$83.0m, respectively.

This was driven by contributions from acquisitions in Hong Kong and Australia, but partially offset by loss of income from divestments and redevelopment projects, coupled with impact from a weaker JPY and HKD against the SGD. DPU improved 2.0% YoY to 1.907 S cents. On a 9MFY18 basis, MLT’s gross revenue rose 4.0% to S$287.7m, forming 70.9% of our FY18 forecast.

The acquisition of Mapletree Logistics Hub Tsing Yi in Hong Kong was completed on 12 Oct 2017, and we expect an improved performance ahead from a full quarter of contribution in 4QFY18. DPU of 5.681 S cents for 9MFY18 represented growth of 1.8% and constituted 74.8% of our full-year projection.

Operationally, MLT registered an average rental reversion of 2%, mainly driven by Hong Kong and Vietnam, while portfolio occupancy inched up 0.4 ppt QoQ to 96.2% due largely to significantly lower vacancies in South Korea. Aggregate leverage ratio stood at 37.8%, as at 31 Dec 2017.

Management highlighted that it continues to see sustained leasing activities across its markets. We will provide more details after the analyst conference call.

Our last rating was a BUY with a fair value estimate of S$1.35.

Source: OCBC Research - 23 Jan 2018