Mapletree Industrial Trust (MIT) reported an inline set of 4QFY18 results, with gross revenue and NPI both increasing 2.9% YoY to S$90.4m and S$67.9m, respectively. This was driven primarily by contribution from the build-to-suit project for HP Singapore (Private) Limited, partially offset by lower occupancy rates across most segments.

DPU rose 2.4% YoY to 2.95 S cents, supported by a S$3.2m distribution declared by its 40%-owned joint venture (owns a portfolio of 14 data centres in the U.S.).

For FY18, MIT’s gross revenue jumped 6.7% to S$363.2m and formed 101.0% of our forecast. DPU grew 3.2% to 11.75 S cents and constituted 99.1% of our projection.

Rental reversions for renewal leases in Singapore appeared soft during 4QFY18, coming in negative for four out of its five segments (Flatted Factories -3.4%; Business Park Buildings -0.8%; Stack-Up/Ramp-Up Buildings -3.8%; Light Industrial Buildings -1.6%).

Nevertheless, there were some positives in 4QFY18, as management achieved a high tenant retention rate of 83.8%, while there was also a slight valuation uplift for its U.S. data centres portfolio by 0.9% to US$783.4m (on a 100% basis) since the previous valuation in Aug and Sep last year. We will provide more updates on MIT after the analyst briefing.

Maintain HOLD but our value estimate of S$2.06 is under review.

Source: OCBC Research - 24 Apr 2018