MLT – DBS
Acquisition pipeline remains strong
Comment on Results
MLT reported 1Q07 results in line with our expectations. Gross revenue grew 116% yo- y to S$28.8m, due mainly to additional income contributed from new properties acquired. Net distributable income increased by 84% y-o-y to S$15.3m. DPU rose by 35% y-o-y to 1.48 cents and moving forward, a better DPU is expected to achieve in 2Q07.
Outlook
The sponsor, Mapletree Investments Pte Ltd, has a development pipeline in Vietnam, China and Malaysia, with total estimated value of S$315.0m. First on MLT s acquisition list is the multi-tenanted logistics and warehousing facility in Vietnam. Construction was completed in Jan 07 and once it is fully leased, MLT is expected to acquire this property. In the medium to long term, MLT would be exploring the India, Thailand and Taiwan markets. However, around 75% of the portfolio would still comprise assets from Singapore, Hong Kong and Japan.
Recommendation
As at 31 Mar 07, the group has announced 13 acquisitions (approximately S$467.0m) which were pending completion. With a target balance of around S$400-500.0m, MLT is on track to achieve the acquisition target of S$1.0bn in 2007. Based on DCF valuation, we have a target price of S$1.46 (assumed acquisitions of S$1bn p.a. from 2007 to 2009). Maintain Buy.