Mapletree Industrial Trust (MIT) reported its 4QFY19 results which met our expectations. Gross revenue and NPI grew 9.3% and 11.7% YoY to S$98.8m and S$75.9m, respectively.

This was driven largely by the acquisitions of 18 Tai Seng and Mapletree Sunview 1, as well as the AEI of 30A Kallang Place, but partially offset by lower occupancy in its Flatted Factories and Stack-up/Ramp-up Buildings segments.

DPU rose 4.4% YoY to 3.08 S cents. For FY19, MIT’s NPI increased by 3.7% to S$287.8m, while DPU of 12.16 S cents represented growth of 3.5% and made up 101.0% of our full-year forecast.

Operationally, MIT’s portfolio occupancy improved 2 ppt QoQ to 90.2% (Singapore: +2.1 ppt to 89.8%; US: unchanged at 97.4%). However, rental reversions remained soft for renewal leases. This came in at -3.4% for Flatted Factories and -4.8% for Business Park Buildings, but was flat for Hi-Tech Buildings. Only Stackup/Ramp-up Buildings showed positive rental uplift, at +0.9%.

Financially, MIT’s aggregate leverage was healthy at 33.8% following a private placement exercise in Feb. This leaves sufficient debt headroom for future acquisitions.

We maintain our HOLD rating on MIT but our fair value estimate of S$1.98 is under review pending an analyst briefing.

Source: OCBC Research - 24 Apr 2019