MLT – CIMB

Continue to wait for drivers

MLT’s 4QFY3/14 results were in line with consensus and our expectations, with this quarter’s DPU accounting for 26% of our full-year forecast and FY14 for 102%. Revenue for the quarter grew by 5.7% yoy, mainly due to new contributions from Singapore, Japan and Korea properties. We maintain our Hold rating with a slightly higher DDM-based (discount rate: 8.1%) target price of S$1.13 as we raised FY15-16 DPS by c.2.5% to reflect the slightly

better-than-expected results.

A good quarter

Mapletree Logistics Trust (MLT) reported its FY14 results, with revenue coming in at S$80.1m (+5.7% yoy) and DPU at 1.87 Scts (+7.8% yoy). The growth in revenue was dampened in part as a result of the weaker yen. Excluding forex losses, gross revenue would have increased to S$81.0m (+6.9% yoy) due to new attribution from the newly completed AEIs in Singapore and Japan, and contribution from the Box Centre in Korea that was acquired during the year (Jul 13). Lower borrowing costs and the partial distribution of the net gain from the divestment of 30 Woodlands Loop further boosted its earnings, bringing the total DPU to 1.89 Scts (+9.2% yoy).

Relying on inorganic growth

Rental reversion in FY13/14 remained healthy at 17%, mainly from Hong Kong and Singapore properties. Looking ahead, with positive rental reversion expected to moderate, together with only 18% of NLA (of which 14% has been renewed ahead of expiry) to be renewed in FY14/15, we believe MLT to rely more on acquisition and redevelopment for growth. In FY14/15, MLT is likely to benefit from the completed redevelopment project at Mapletree Benoi Logistics Hub (100% pre-committed), and the recently announced S$34.3m acquisition in Iskandar.

We maintain a Hold rating

With the current leverage ratio of 33.3%, MLT continues to have the financial ability to capitalise on further inorganic opportunities. Although it is well poised to grow in FY14/15, we believe that the positivity of MLT may be dampened by the continual weakness in the yen. We maintain our Hold rating with a slightly higher DDM-based target price of S$1.13 as we wait for more impactful acquisitions/redevelopments.