Analysts from CGS-CIMB Research, DBS Group Research and Maybank Kim Eng have rated ARA LOGOS Logistics Trust (ALOG) at “add”, “buy” and “buy” respectively as they see positive growth prospects for the REIT following its 2HFY2020 and FY2020 results ended December.

See: ARA LOGOS Logistics Trust reports 8.9% higher 2H20 DPU of 2.927 cents on overall better performance

ALOG’s FY2020 distribution per unit (DPU) of 5.25 cents also came in above all three brokerage’s expectations.

CGS-CIMB analysts Eing Kar Mei and Lock Mun Yee have increased their target price estimate to 74.9 cents from 69.8 cents previously with a higher DPU forecast for FY2021-2022 by 4-5% to factor in lower financing cost and lower unit base.

Viewing the acquisition of a majority stake in the LOGOS Group in March 2020 as a plus amid the strong demand for warehouse space, Eing and Lock feel that the counter offers an “attractive dividend yield of over 7%”.

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Upside catalysts to the REIT’s unit price include accretive acquisitions, while weaker-than-expected rental reversions may affect its re-rating.

DBS’s Dale Lai and Derek Tan have, similarly, upped their target price estimate to 80 cents from 70 cents previously as they feel the REIT’s acquisition of its logistics portfolio has “paid off”.

Like Eing and Lock, Lai and Tan like the REIT for its “high and growing yields that are in excess of 7.0%, backed by resilient pure-play logistics portfolio”.

“Infused with Logos as a new sponsor, we see the REIT benefiting from their management expertise coupled with significant growth pipeline,” they write.

The REIT’s logistics portfolio, as reported in its results release, has outperformed other industrial properties with occupancies in excess of 97%. Reversions have also remained positive and is expected to continue in 2021.

Lai and Tan also feel the REIT has plenty of room to grow as it leverages on its sponsor’s network.

“ALOG can look to grow in key logistics hubs in Australia, China and South Korea. In the medium-term, the REIT may also look to increase its stakes in the New LAIVS and OP Funds for inorganic growth,” they say.

“We are excited that LOGOS brings about a new paradigm for ALOG to grow into. A vertically integrated logistics player, LOGOS offers significant inorganic growth potential, having a logistics portfolio valued at $9.4 billion located throughout Asia Pacific.”

“In addition, ALOG can also ride on the strategic partnership with Yang Kee Logistics in Singapore as it harnesses the longer-term structural e-commerce growth trends in Asia,” they add.

Due to the placements and preferential offering, Lai and Tan foresee a dilution of 1.7% to ALOG’s FY2021 DPU, and expect DPU to rebound by 4% by FY2022.

Unlike the rest, Maybank’s Chua Su Tye has kept his target price estimate of 80 cents.

The way he sees it, ALOG’s valuations are “compelling” at 8% FY2021 dividend yield (compared to Eing and Lock’s as well as Lai and Tan’s 7%) with catalysts from a stronger-than-expected DPU recovery.

Chua, like the others, sees the REIT’s sponsor as adding deal pipelines and having good growth prospects.

Units in ALOG closed 1.5 cents lower or 2.1% down at 69.5 cents on Jan 28.