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Mapletree Industrial Trust - Hi-Tech Momentum

Shared By Stock Fanatic on Thursday, July 5, 2018 | 5.7.18

Buying opportunity after pull-back; DPU fine-tuned
MINT’s shares have pulled back along with the broader market and in partial response to rising interest rates. Still, we believe fundamentals are intact, backed by stronger leasing demand and a more resilient portfolio following its hi-tech asset investments and US diversification in 4Q 2017. We also believe low gearing, debt headroom of SGD700m and clear acquisition-growth potential can provide upside to our 3-year 6.3% DPU CAGR forecast. Following the release of its annual report, we adjust our DPU for the latest asset-level details and revenue updates. We also incorporate the finalisation of MINT’s 7 Tai Seng Drive acquisition on 27 Jun. Our DDM-based TP remains at SGD2.25 (WACC 7.2%, LTG 1.5%). BUY.

Industrial sector likely bottomed; hi-tech on the rise
Singapore’s industrial-sector recovery is underway, supported by positive macros and easing supply pressures. Leasing in Apr / May 2018 jumped 18.7% YoY, maintaining its double-digit growth since 3Q17 amid more optimistic expectations by the manufacturing sector. Meanwhile, MINT’s completion of its 30A Kallang Place AEI, development of a BTS data centre at Sunview Way and conclusion of its 7 Tai Seng Drive acquisition should lift its hi-tech contributions from 31% to 34% of Singapore AUM.

Technical Analysis
Daily Chart
Balance sheet backing
MINT’s portfolio has strengthened after its first overseas investment in 4Q17. Its US data-centre JV could potentially double its hi-tech contributions from 21.8% of NPI in FY17 to 40.2% by FY21E. US datacentre leasing demand is expected to grow by an 8.7% CAGR in 2017- 2022E vs a supply CAGR of only 6.8% (source: 451 Research). About 24% of its portfolio by land area is on freehold land while WALE has lengthened from 3.6 to 3.8 years. We see further acquisition potential, given its low 33.1% gearing vs history and peers. The deployment of an estimated SGD700m of debt headroom could add 9-12% to our DPU.

Source : Maybank Kim Eng Research
(Read Report)

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Posted on Thursday, July 5, 2018 | 5.7.18
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