Mapletree Logistics Trust's 4Q21 Results a Beat, Further Re-rating Ahead

• Mapletree Logistics Trust (SGX:M44U) delivered a strong 4Q21, with DPU up 5.5% y-o-y and 4.6% q-o-q, driven by higher rental income and contribution from S$1.6b in acquisitions. FY21 DPU was ahead of both ours and consensus’ estimates.
• We expect occupancies to remain resilient on the back of steady demand growth, and raised Mapletree Logistics Trust's DPU forecast by 2% on better rental assumptions, and to factor in its maiden India deal.
• Mapletree Logistics Trust may have missed acquiring Blackstone’s S$4.1b Australian industrial portfolio (which would have likely been via an equity find raising) given recent share price weakness, but Mapletree Logistics Trust's debt headroom at S$2.8b (50% limit) is ample to fund further deals. We expect management will look to add from its sponsor in China, Malaysia and Vietnam, and third-parties in South Korea and Australia, at potential +1-2% accretion to DPUs.
• Our DDM-based target price for Mapletree Logistics Trust rises to S$2.25 (COE: 5.6%, LTG: 2.0%). BUY.

Better Reversions in HK, M’sia, Vietnam, Japan

• Mapletree Logistics Trust's revenue and NPI rose 22.6% y-o-y and 19.1% y-o-y, with higher contribution from existing properties, acquisitions (in China, Vietnam, Australia, Japan, South Korea and India), and the completed Ouluo Phase 2 redevelopment.
• Portfolio occupancy improved to 97.5%, from 97.1% in 3Q21, reflecting better occupancies in Hong Kong, South Korea and China.
• Mapletree Logistics Trust's portfolio rental reversion was strong at +2.4%, from +1.6% in 3Q21 and +1.5% in 2Q21, mainly contributed by its leases in Hong Kong (+3.2%), Malaysia (+3.3%), Vietnam (+3.8%) and Japan (+5.7%).

Strong Leasing Momentum

• Leasing momentum was maintained renewed in Singapore, China and South Korea, with reversions at ~+1.0%, +2.0%, and +1.0-1.5% respectively.
• The supply outlook remains constructive, especially in its four key markets (Singapore, Hong Kong, China and Japan) and we see positive demand-led fundamentals supporting rental recovery.

Balance Sheet Sound, Eyeing Deals

• Mapletree Logistics Trust's leverage fell 50% interest in the China JV properties. Cap rates were stable in Singapore (at 5.25-7.25%) and Hong Kong (3.75-4.60%), but tightened in its other core markets (by 10-110 bps).

Source: Maybank Kim Eng Research - 22 Apr 2021