• 3QFY19 DPU +5.0% YoY
• Robust rental reversion of 4.5%
• Occupancy held firm

3QFY19 Results In-line With Our Expectations

Mapletree Logistics Trust (MLT) reported a strong set of 3QFY19 results which met our expectations. Gross revenue and NPI jumped 23.0% and 25.9% YoY to S$120.8m and S$104.5m, respectively. This was driven by organic growth, contribution from the completed redevelopment of Mapletree Ouluo Logistics Park Phase 1 and acquisitions.

DPU grew at a smaller pace of 5.0% YoY to 2.002 S cents as a result of higher borrowing costs and a larger unit base, but this was the strongest YoY growth delivered by MLT since 1QFY15. On a 9MFY19 basis, MLT’s NPI rose 17.3% to S$284.5m and this constituted 73.5% of our FY19 forecast. DPU of 5.917 S cents represented growth of 4.2%, and this accounted for 74.6% of our full-year projection.

Rental Reversions Also Gathered Pace

Besides MLT’s healthy DPU growth, its rental reversions also gathered pace during the quarter, coming in at +4.5% (1QFY19: +2.0%; 2QFY19: +1.3%). This was driven largely by Hong Kong, China, Singapore and Vietnam. Its portfolio occupancy held firm at 97.7% (+0.1 ppt), with only China recording a dip in occupancy rates from 98.3% to 95.8%.

Completed Two Acquisitions During 3QFY19; Awaiting Completion of Another

MLT continued to diversify its portfolio. While already having a presence in Australia, MLT made its maiden entry into the Brisbane logistics market with the acquisition of the Coles Distribution Centre warehouse (expected NPI yield: 5.7%) on 28 Nov 2018. It also completed the acquisition of Wonjin Logistics Centre in South Korea a day later for a purchase consideration of KRW37.85b (~S$46.4m) and this translates into an expected initial NPI yield of 6.5%.

Last but not least, MLT had entered into a conditional asset transfer agreement with Unilever International to acquire a warehouse in Vietnam-Singapore Industrial Park I, Binh Duong province, Vietnam for a purchase consideration of VND725.1b (~S$43.0m). This property is designed with Grade A building specifications and is expected to generate an initial NPI yield of 8.3%.

Incorporating the aforementioned acquisitions, we raise our FY19 and FY20 DPU forecasts by 0.2% and 2.2%, respectively, and consequently our fair value estimate from S$1.37 to S$1.40.

Source: OCBC Research - 22 Jan 2019