MapleTree – CIMB

Stable growth

• In line. Full-year distributable income of S$97.4m was in line with expectations. However, full-year DPU of 7.24cts was above consensus and our expectations due to fewer units in issue than forecast after the rights issue. Full-year gross revenue of S$184.9m was up 30.5% yoy mainly on contributions from 11 acquisitions completed in 2008. Net property income margins declined from 87.4% to 86.1% on higher property-related expenses. Portfolio occupancy improved to 99.6% from 99.0% in the last quarter.

• Strong reversions in 4Q08. Average rentals achieved for leases renewed in the quarter were 51.2% higher than preceding rentals. These were mainly leases in Singapore and Hong Kong, and partly contributed by several new tenants who are data centre operators.

• Outlook not so negative. After the rights issue, MLT’s asset leverage is a healthy 38.1%. Short-term debt of S$218m (19% of total debt) due for refinancing in 2009 looks manageable. Despite the fact that acquisitions are expected to take a back seat, full-year contributions from the 11 acquisitions last year should supplement organic growth. Additionally, management highlighted that concerns over warehouse oversupply in Singapore are exaggerated, as 81% of the 682,000sq m of upcoming supply over the next two years has been pre-leased or is being built by end-users. In Hong Kong, MLT’s second largest market, there is no new supply expected for the two years.

• Maintain Outperform; unchanged target price of S$0.60 (discount 9.6%). We maintain our assumptions for FY09-10 and introduce our DPU forecast for FY11. MLT offers dividend yields of 14.1%. We remain confident that performance in the current year will be stable with some room for upside on the back of full-year contributions from the previous year’s acquisitions. Maintain Outperform.