Mapletree North Asia Commercial Trust (MNACT) reported its 1QFY19 results which came in within our expectations. Gross revenue and NPI jumped 6.2% and 6.7% YoY to S$94.4m and S$76.8m, respectively, with the latter forming 23.6% of our FY19 forecast.

A full quarter of contribution will come from the acquisition of its Japan portfolio from 2QFY19, as completion of the deal took place on 25 May 2018. DPU grew at a smaller magnitude of 1.6% YoY to 1.881 S cents due to a larger unit base from a private placement exercise to fund the Japan acquisition. This constituted 24.6% of our full-year forecast. Out of the 1.881 S cents DPU, an advanced distribution of 0.764 S cents for the period from1 Apr to 7 May 2018 had already been paid on 25 May this year.

Operationally, overall portfolio occupancy moved up 1.1 ppt QoQ to 99.6% due to robust improvement at Gateway Plaza (+3.1ppt to 99.6%) and addition of the Japan portfolio which is 100% occupied. Rental reversions also gathered momentum, coming in at 14% for Festival Walk (retail component), 11% for Gateway Plaza, 18% for Sandhill Plaza and 6%for Japan.

Another positive came from solid growth in Festival Walk’s retail sales and footfall at 10.9% and 7.2% YoY to HK$1.29b and 9.7m, respectively.

We will provide more details afterthe analyst conference call. We currently have a BUY rating and S$1.42 fair value.

Source: OCBC Research - 31 Jul 2018