Mapletree Logistics Trust - Awaiting acquisitions

With its currency hedges in place, MLT’s performance was unmarred by JPY weakness as it continued to deliver low single-digit DPU growth. We continue to await acquisitions, which is critical in our view, for further growth and upside from current levels.

4Q/FY13 DPUs came in broadly in line with consensus and our expectations, at 25/98% of our full-year forecast. We tweak our FY14-15 DPUs to factor in a larger but later acquisition. Our DDM-based target price is raised after rolling forward our numbers with a lower discount rate of 7.1% (previously 7.3%). Maintain Neutral.

Unmarred by JPY weakness
MLT’s performance was unmarred by JPY weakness. 4Q DPU was up 1.8% yoy (or 3.6% excluding pay-out of divestment gains in 4QFY12). Qoq, DPU was flat. Yoy growth came from a 6% revenue increase on an enlarged portfolio and positive rental reversions, but partially offset by a weaker JPY. 

We understand that >90% of FY14 JPY cashflows have been hedged, which should mitigate risks of further JPY weakness. Overall, 85% of its distributable profit is hedged or derived in SGD, compared to a corresponding 82% in Mar 2012. 

The portfolio remained healthy with rental reversions staying a strong 14% (21% if conversions of single-tenanted buildings to multi-tenanted ones are included) although occupancy slipped to 98.5% from 99.2% in 3Q, from dips in S. Korea and Singapore. 15% of leases will expire in FY14 and rental reversions could continue given more expiries from Singapore, which typically enjoys stronger reversions.

Slight revaluation gains
Assets saw a marginal revaluation gain of S$20m (~0.5%) as the creep-up in asset values in Singapore and Hong Kong offset translation losses in Japan. We understand that cap rates were largely stable. Asset leverage is now at a lower 34% due to lower translated JPY borrowings.

Maintain Neutral
MLT appears to have benefitted from JREITs’ recent rally. Maintain Neutral on a lack of meaningful catalysts. Our estimates factor in a larger (S$150m) but later debtfunded acquisition for FY14. (Read Report)

Source : CIMB Research