Positive on latest results and acquisition Mapletree Logistics Trust

Analysts are overall positive on Mapletree Logistics Trust’s (MLT) proposed acquisition of a portfolio of properties from its sponsor Mapletree Investments for $1.04 billion, which was announced on Oct 19. MLT is proposing to acquire a 100% interest in seven properties in China, with the remaining 50% interest in 15 properties in China that it already owns. The REIT is also proposing to acquire one property in Malaysia and one in Vietnam.

The acquisition, to be funded via a combination of debt and new equity, is expected to add 1.3% to DPU on a pro forma basis raising it to 8.25 cents, and 6.6% to NAV taking it to $ 1.28.

Along with its proposed acquisition announcement, MLT announced its 2QFY2021 results, which saw DPU increase by 1.5% y-o-y to 2.055 cents.

On the back of these announcements, Maybank Kim Eng is reiterating its “buy” recommendation on MLT with a target price of $ 2.40.

MLT is scaling up again on its higher- growth China, Malaysia and Vietnam portfolio, with its latest acquisition NLA should be raised by 24.2% and AUM by 11.5%, says analyst Chua Su Tye in a report dated Oct 20.

“We expect tight supply and positive demand- led fundamentals to drive medium term rental growth, whilst strengthening MLT’s net

Maybank Kim Eng “buy” $2.40 CGS-CIMB “hold” $2.05 work connectivity, as post- deal, its multi- location tenants would rise to 42% of its gross revenue, from 25% in 2015,” says Chua.

“Beyond the 1.3% DPU and 6.6% NAV boost, rising ecommerce demand and pandemic-induced supply chain diversification plans should underpin the assets’ long term growth upside,” adds Chua.

CGS-CIMB Research is also positive on MLT, albeit keeping its “hold” call, but with a higher target price of $ 2.05 from $ 1.89 previously.

“Post-acquisition, MLT’s portfolio AUM would increase to $10 billion and enable the trust to further strengthen its connectivity across key logistics nodes and strengthen its supply chain resiliency as well as diversify its tenant base with an estimated 58% of its tenants involved in e- commerce,” says lead analyst Lock Mun Yee.

“Furthermore, management guided that it is continuing to explore third- party acquisition opportunities, particularly in Australia, Korea, Malaysia, Vietnam and Japan. We anticipate that the trust would be able to conclude more acquisitions in the short- to medium- term. In addition, with greater debt headroom capacity, we believe any further new purchases would likely be accretive,” she adds in the Oct 20 report, while commenting that she likes the stock for its pan- Asian logistics asset focus.