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CGS International lifts DPU estimates and TP on MPACT after Mapletree Anson divestment

Felicia Tan
Felicia Tan • 2 min read
CGS International lifts DPU estimates and TP on MPACT after Mapletree Anson divestment
Mapletree Business City, which is deemed to be a core asset of MPACT. Photo: Mapletree
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CGS International analysts Natalie Ong and Lock Mun Yee have raised their target price on Mapletree Pan Asia Commercial Trust N2IU -

(MPACT) to $1.59 from $1.57 after the REIT announced the divestment of Mapletree Anson.

The divestment, in Ong and Lock’s view, is “positive” as it derisks MPACT’s balance sheet, lifts the overhang on its gearing and restores financial flexibility.

With the REIT manager indicating that it intends to channel $762 million of the divestment proceeds to pare down its Singapore dollar (SGD)-denominated debt with a cost of debt above 4%, the divestment will result in a pro-forma distribution per unit (DPU) accretion of 1.5% for the FY2024 ended March 31.

Gearing will also be reduced to 37.6% following the divestment.

To the analysts, the divestment will result in a DPU accretion of about 1.0% from the repayment of the above-4% debt for FY2025.

Meanwhile, as the REIT manager sees that interest rates will remain higher for longer while asset yields take some time to expand, it says it intends to wait for three to six months before resuming its hunt for acquisition prospects.

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It adds that it remains open to divesting its assets if the offer price provides accretion to its DPU and, or improves its balance sheet. These assets, however, exclude VivoCity and Mapletree Business City (MBC), which are deemed to be core to the REIT’s portfolio.

In addition to their raised target price, Ong and Lock have raised their DPU estimates for FY2025, FY2026 and FY2027 by 1.0%, 1.4% and 1.4% respectively, to factor in the divestment and debt repayment.

They remain positive with an unchanged “add” call on improving operational performance, strengthened balance sheet following the divestment and attractive valuations.

As at 1.10pm, units in MPACT are trading 1 cent lower or 0.8% down at $1.24.

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