• 4QFY19 DPU +4.5% YoY
• Positive rental reversions of 2%
• 3PLs have expressed interest

4QFY19 Results In-line With Our Expectations

Mapletree Logistics Trust (MLT) reported an inline set of 4QFY19 results. Gross revenue and NPI jumped 13.0% and 15.0% YoY to S$121.4m and S$105.0m, respectively. DPU grew at a healthy clip of 4.5% YoY to 2.024 S cents. For FY19, MLT’s NPI rose 16.7% to S$389.5m, while DPU saw an improvement of 4.2% to 7.941 S cents. Both formed 99.9% of our full-year forecasts.

Operationally, MLT achieved average rental reversions of +2% in FY19. This was driven by Hong Kong (+5.8%), Vietnam (+2.8%) and China (+2.6%). Malaysia also had positive rental reversions of 1%, while Singapore (+0.3%) and South Korea were flat. Portfolio occupancy remained firm at 98.0% (+0.3 ppt QoQ).

China was the only country which saw a dip (-0.3 ppt to 95.5%). JD.com had previously given up 50% of its space at Mapletree Zhenjiang, but MLT managed to backfill ~30% of the space vacated. Nevertheless, there was also higher vacancy at Mapletree Waigaoqiao Logistics Park, but MLT has managed to backfill some of the space post- 4QFY19.

CWT Pte Ltd’s Situation Remains Stable for Now

Regarding the CWT situation, management reiterated that it is still business as usual for CWT Pte Ltd (CWTPL), with no rental arrears or defaults. It also appears that the receiver has no intention to disrupt CWTPL’s Singapore operations for now. Furthermore, MLT has also received queries from other 3PLs providers expressing an interest to take over CWTPL’s operations if available.

Higher Portfolio Valuation; Capital Recycling in Place

MLT recorded a revaluation gain of S$203.0m for its investment properties in FY19. This was a result of cap rate compression across most of its markets ranging from 10 bps to 110 bps (Vietnam) on a weighted average basis. Management continued its active capital recycling activities, the latest being the divestment of five of its properties in Japan for a total sale consideration of JPY17.5b, or ~S$213.3m.

The divestment gain of S$8.5m is expected to be distributed to unitholders over eight quarters from 1QFY20. We factor this, coupled with the loss of future income, higher finance cost assumptions and a larger unit base in our model. Consequently, our fair value dips from S$1.45 to S$1.38.

Source: OCBC Research - 29 Apr 2019