In Line; Maintain HOLD

• MAPLETREE LOGISTICS TRUST (SGX:M44U)’s logistics assets continued to stabilise. 1Q20 DPU was up 3.5% y-o-y to SGD2.03cts, on a larger AUM. Its diversified portfolio, supported by deals in FY19, will likely cushion macro uncertainties.
• Our DPUs are mostly unchanged after some fine-tuning of estimates. Our Target Price rises to SGD1.55 (COE: 7.1%, LTG: 2.0%) as our risk-free rate has been lowered to 2.5%. In view of limited near-term catalysts, maintain HOLD.
• Our top industrial-sector pick remains business-park-focused Ascendas REIT (SGX:A17U) (BUY, Target Price SGD3.30, see report: Ascendas REIT - Growth Backing Yield), which trades at higher 5.6% yields with stronger DPU growth prospects and the balance sheet for acquisitions.

Longer WALEs, Stabilising Assets

• Mapletree Logistics Trust's 1Q20 revenue and NPI rose 13.6% y-o-y and 18.2% y-o-y respectively. This was driven by:
  1. stable performances across assets,
  2. contributions from its completed redevelopment of Ouluo Logistics Park Phase 1 in Shanghai, and
  3. acquisitions completed earlier.
• Portfolio occupancy dipped q-o-q from 98.0% to 97.6%, with lower occupancies in Singapore (down from 97.4% to 96.5%), Hong Kong (98.8% to 97.6%) and South Korea (99.1% to 98.5%).
• Rental reversion was +1.8% vs +2.0% in 4Q19. Reversions were positive in China (+3.3%), Hong Kong (+2.6-3.0%) and Vietnam (+3.7%).
• WALE was extended from 3.8 to 4.8 years with a renewal of two long-term leases in Singapore, with 37% of its leases expiring in FY20 and FY21, mainly in Singapore (12%) and China (9%).

Cautious on Organic Growth, Upside From Deals

• Management adopted a more 2020, supported by easing supply.
• Mapletree Logistics Trust remains optimistic on the Blackstone (BX US) for JPY100b at a 4% cap rate.
• Gearing was 368% as at end-Jun 2019, with an deals.

Source: Maybank Kim Eng Research - 23 Jul 2019