Lower DPU but positive rental reversions for Mapletree Industrial Trust leave analysts mixed

is a great time to invest in Singapore Condo as it is still in its early stages of development. The city offers a multitude of amenities and convenience. There is a wide selection of condominiums to choose from and they come in different sizes and prices. Investing in one of these properties can provide you with a lucrative rental yield and potential for capital appreciation in the long run. Additionally, there are usually low maintenance fees and taxes involved. Purchasing a luxurious condominium can be a long-term investment opportunity for those interested in Singapore real estate, 15 Mar 2023 is the perfect time to make the move.

Anaylsists have mixed feelings when it comes to Mapletree Industrial Trust (MINT), especially after the publication of their 1QFY2024 results which ended June 30. The trust’s distribution per unit (DPU) saw a 2.9% year-on-year (y-o-y) dip to 3.39 cents, however, there was a 1.8% quarter-on-quarter (q-o-q) increase. This was in line with the expectations of OCBC Investment Research (OIR), DBS Group Research and CGS-CIMB Research who had all maintained their “add” and “buy” calls. However, Maybank Securities which identified that the DPU was consistent, maintained its “hold” call.

Gross revenue and net property income (NPI) increased by 1.7% and 0.7% y-o-y respectively, largely due to contributions from new leases. Although, this was offset by an increase in utilities and maintenance expenses. As borrowing costs were 110 basis points (bps) higher than the same period last year, it lead to the DPU decline.

For every 100 bps increase in base interest rates, Mapletree Industrial Trust’s 1QFY2024 DPU is expected to be negatively impacted by -1.4%. OIR’s research team had the most optimistic outlook, increasing its target price from $2.77 to $2.78. This accounted for the fact that the 1QFY2024 DPU accounted for 25.4% of its initial FY2023 prediction.

The team highlighted the trust’s sizable portfolio of industrial assets in Singapore and successful data centres portfolio in the US and Canada. They also went on to say that, by investing in MINT, investors have a proxy to the fast-growing digitalisation and data outsourcing trends.

Advertisement
The average rental rate for MINT’s Singapore and North American portfolios increased by 0.9% and 0.4% q-o-q, to $2.18 per square foot (psf) per month and US$2.41 ($3.20) psf per month respectively. Notably, the portfolio occupancy rate declined for the second consecutive quarter, slipping 1.6 percentage points (ppt) q-o-q to 93.3%.

MINT’s proposed acquisition of a data centre in Osaka for JPY52 billion ($507.9 million), was taken into account by OIR when calculating the increased fair value estimate of $2.78.

CGS-CIMB has maintained their target price for MINT at an unchaged $2.61, noting the trust’s healthy balance sheet and increasing exposure to the new economy sectors. After including the proposed acquisition and enlarged units base following the recent private placement, the research team at OIR raised FY2024-FY2026 DPU by 0.4-1.24%.

DBS analysts Derek Tan and Dale Lai maintained their “buy” call but lowered their target price from $2.70 to $2.60. This was due to the near term risk factors from the expiry of the AT&T lease which they had previously noted and priced.

Maybank’s Krishna Guha has also maintained his “hold” call at an unchanged target price of $2.30, noting the slowdown in the local manufacturing sector, the potential of properties not being renewed and the fluid funding environment.

Currently, as at 11.55am, shares in Mapletree Industrial Trust are trading 3 cents lower or 1.32% down at $2.24.