Mapletree Logistics Trust - Acquisitions remain in focus (DBSVickers)

BUY S$0.935

Price Target: S$ 1.07

At a Glance

• 2Q11 DPU of 1.6 Scts (+7%y-o-y) was in line

• Operationally stable; further acquisitions to underpin earnings upside

• Maintain BUY and S$1.07 TP based on DCF

Comment on Results

In Line 2Q11 results. Gross revenue and NPI for the quarter rose 26% y-o-y (+6% q-o-q) and 25% y-o-y (4% q-o-q) to S$65.8m and S$57.1m respectively, lifting distributable income to about S$38.8m (+26% yoy, +3% qoq). The robust performance was largely due to an enlarged portfolio size as well as strong organic growth of 5%, backed by positive rental renewals and high occupancies. As a result, DPU rose by about 7% to 1.6 Scts. Separately, the group has also announced a 0.09ct bonus payout from the divestment gain of 2 properties to the unitholders over the next 3 quarters.

The group has successfully renewed 52,000 sqm of space at higher average rentals. Average portfolio occupancy remains robust at 98.9%. While the group has another 169,000 sqm of space to be renewed for the remaining year, management guided that about 50% is currently under negotiation and is on track to lease out the remainder. The manager also intends to continue to reconfigure some of their portfolio single-tenanted space to multi-tenanted building to further optimize property yields.

Further acquisitions a possibility. While Singapore remains its core business area, the group is also actively looking to grow its overseas portfolio in markets like China and Korea. The group recently signed MOUs to develop 2 distribution centres in Zhengzhou with total GFA of 144,000 sqm recently, which should contribute positively in the medium term.

Recommendation

BUY, TP S$1.07 maintained. Backed by strong economic fundamentals and a robust balance sheet, MLT remains on a growth track. Forward yields of 7.1-7.3% remain attractive, given its large cap and strong sponsor status.