Mapletree Greater China Commercial Trust (MGCCT) reported its 3QFY18 results which came in within our expectations. Gross revenue grew 0.7% YoY to S$88.5m but NPI was flat at S$71.4m. The former was largely attributable to higher rentals from all its three assets, but partially offset by a weaker HKD and RMB against the SGD.

DPU rose 5.1% YoY to 1.868 S cents, underpinned by a reduction in finance costs which was in turn driven by the refinancing of bank debts at a lower cost of debt and lower financing fees.

For MGCCT’s 9MFY18 performance, gross revenue increased 3.8% to S$265.5m and constituted 73.9% of our FY18 forecast. DPU of 5.582 S cents represented a growth of 3.6% and formed 75.7% of our fullyear forecast.

Operationally, MGCCT’s properties continued to showcase resilience. Positive rental reversions were achieved across all three assets, coming in at 10% for Festival Walk (retail component), 9% for GP and 16% for Sandhill Plaza (SP). Festival Walk’s footfall and tenants’ sales gathered momentum in 3QFY18, increasing by 4.2% and 6.4%, respectively.

Overall portfolio occupancy dipped slightly by 1.3 ppt QoQ to 96.9%, although Festival Walk remained fully occupied. We will provide more details after the analyst conference call.

Our BUY rating and S$1.28 fair value estimate is under review.

Source: OCBC Research - 26 Jan 2018