MapleTree – CIMB

Asia’s logistics industry remains positive

• 4Q07 results above expectations. Revenue was up 49.9% yoy to S$40.3m while distributable profit was up 67.8% yoy to S$19.7m. Full-year revenue was S$141.7m with a distributable profit of S$71.8m and DPU of 6.57cts, which is 2% above our ‘s and consensus’ forecast. The strong performance in the last quarter was attributed to increased revenue from nine acquisitions completed in the quarter. 2007 operating expenses were significantly below expectations as a result of economies of scale. As at 31 Dec 07, MLT’s portfolio reached S$2.379bn, with revaluation gains of S$125.58m.

• Fund-raising postponed, gearing pushing towards regulatory limit. MLT is postponing a rights issue earlier expected to be carried out in the first quarter, due to volatile global capital markets. It remains confident of achieving acquisitions already announced but not yet completed, amounting to S$382m, without equityfunding. Further, management would be concentrating on organic growth, with some 180,000 sq m of logistics space due for renewal. Reversion rates are to be higher than the average of 9.3% in 2007.

• Maintain Outperform; DDM-derived target price lowered to S$1.36 from S$1.65. MLT is expected to gear up to its regulatory limit of 60% in 2008 as equity fund-raising would be difficult. As at 31 Dec 07, MLT’s leverage was 53.4%, and debt headroom of S$405m leaves limited room for our target acquisitions of S$800m this year. We have thus cut our acquisitions target to S$600m a year for 2008-10, with an asset leverage assumption of 60% for 2008. Cost of equity assumption is unchanged at 6.9%. As a result, our DPU estimates for FY08-09 have been reduced by 2-12%. Accordingly, our DDM-derived target price drops to S$1.36. Maintain Outperform as MLT’s underlying assets remain good and the outlook for Asia’s logistics industry remains positive.