Results in Line, Further Re-rating Ahead

• Mapletree Logistics Trust (SGX:M44U) delivered a stable 3QFY21 (Oct 2020 to Dec 2020) as DPU rose 1.0% y-o-y due to higher rental income and earlier acquisitions offsetting its divestments and provisions for rental relief.
• Mapletree Logistics Trust’s growing APAC-focused AUM is well-positioned to capture the sector’s multiple structural growth themes, i.e. rising e-commerce demand and supply chain diversification, which have been accelerated by the pandemic.
• Mapletree Logistics Trust remains among our top S-REIT picks.

Better Reversions in HK, China, Vietnam, Malaysia

• Mapletree Logistics Trust's revenue and NPI rose 15.5% y-o-y and 14.9% y-o-y due to higher contributions from existing properties, acquisitions and the completed Ouluo Phase 2 redevelopment.
• Portfolio occupancy was stable at 97.1%, reflecting lower occupancies in Hong Kong and Japan, partly offset by higher occupancies in China and South Korea.
• Its portfolio rental reversion was +1.6%, up slightly from +1.5% in 2Q21, mainly contributed by its leases in Hong Kong (+3.0%), China (+2.6%), Vietnam (+3.7%) and Malaysia (+2.2%).

Strong Leasing Activity

• Leasing activity was strong with 266,000 sqm (~4% of portfolio) renewed or replaced during the quarter (from 326,000 sqm in 2Q21). Single-asset expiries over FY21-22 remained low at 2.2% and its WALE was stable at 3.7 years.
• Demand continues to be driven by e-commerce tenancies and 3PLs. In Singapore, management is seeing an uptick in last-mile activity, which has offset slower demand for general cargo. The supply outlook remains constructive and we see positive demand-led fundamentals supporting rental recovery

Balance Sheet Sound, Eyeing South Korea, India

• Mapletree Logistics Trust's leverage has declined q-o-q from 39.5% to 36.8% as of end-Dec 2020, after the completion of the S$644m equity fund raising. Mapletree Logistics Trust's AUM has risen from S$9.0b to S$10.2b with the acquisitions of the China, Malaysia and Vietnam portfolio, and two deals in Australia and Japan.
• Debt headroom at S$3.0b (50% limit) on our estimates is ample to fund further deals, as management looks to add another S$200-400m from third-parties in South Korea and India.

Source: Maybank Kim Eng Research - 26 Jan 2021