Home Capital Broker's Calls

Mapletree Commercial Trust 'placed for recovery', stronger 2HFY22 anticipated: Maybank Kim Eng

Atiqah Mokhtar
Atiqah Mokhtar11/3/2021 05:58 PM GMT+08  • 2 min read
Mapletree Commercial Trust 'placed for recovery', stronger 2HFY22 anticipated: Maybank Kim Eng
Maybank Kim Eng anticipates a better 2HFY22 underpinned by rising office demand and added traction from VivoCity's recovery.
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

Maybank Kim Eng’s Chua Su Tye remains sanguine on Mapletree Commercial Trust (MCT) following its 1HFY2022 ended September results announcement on Oct 27.

See: Mapletree Commercial Trust reports DPU of 4.39 cents, up 5.3% y-o-y

Chua has kept his “buy” rating for the counter with an unchanged target price of $2.35. “The results were in line to consensus’ and our estimates, and with 1H22 revenue/NPI/DPU at 47% of our FY2022, we have kept our forecasts unchanged,” he remarks in a Oct 28 research note.

The way Chua sees it, MCT will have a stronger 2HFY2022, underpinned by rising office demand, and improvement in VivoCity’s operating metrics alongside a gradual reopening.

He notes that despite a slower q-o-q performance, MCT reported stronger y-o-y performance in 1HFY2022, with revenue and NPI up 11.5% and 10.7% respectively, driven by lower rental rebates and the compensation received from a lease pre-termination at mTower.

Portfolio occupancy climbed to 93.3%, up from 92.6% in 1QFY2022 with improvements across all its assets, except Mapletree Anson.

See also: Strong demand for sweet treats: Analysts at Lim & Tan Securities lift Delfi’s TP

Meanwhile, revenue and NPI at VivoCity fell 20.5% and 22.7% on a half-year basis, but was up 2.6% and 4.0% respectively on a q-o-q basis on the back of higher occupancy, which improved from 97.7% to 98.6%, and with committed occupancy higher at 99.6%.

Chua has a flattish outlook for rent reversions at Vivocity following the 3.5% recorded for the 1HFY022, with upside risk from further easing restrictions.

For more stories about where the money flows, click here for our Capital section

See also: CGS-CIMB sees AEM's 'possible recovery' from 2HFY2023 and potential earnings recovery for FY2024

MCT’s assets under management were up 0.5% at $8.8 billion, while gearing remains low at 33.7%. Chua notes that MCT’s growth profile is stronger from its MBC assets, which now contribute some 43% of AUM, ahead of retail assets at around 36%.

"While a $1.8b billion debt headroom (at 45% limit) offers deal options, and management is eyeing AUM growth, visibility is low given tight office cap rates and a limited sponsor Singapore pipeline,” he comments.

Chua highlights that valuations are undemanding at 4.5% dividend yield, with better DPU visibility from its MBC assets, and added traction from VivoCity’s recovery into the coming quarters.

Units in MCT closed down 5 cents or 2.28% lower at $2.14 on Nov 3.

Photo: Vivocity / Mapletree Commercial Trust

Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.