SINGAPORE (Nov 24): CIMB is maintaining its “add” call on Mapletree Industrial Trust (MINT) with a target price of $1.68, seeing its built-to-suit for Hewlett-Packard is almost completed.

Analyst Yeo Zhi Bin notes that MINT has been growing its portfolio of hi-tech buildings since FY14. By FY19, hi-tech buildings will account for 30% of the group’s net property income (NPI).

MINT is also projected to deliver a three-year DPU CAGR of 2.7% through FY16 to FY19, one of the highest in the sector, notes Yeo.

This growth is underpinned by the BTS for HP and asset enhancement initiatives at Kallang Basin 4, which will contribute from FY18 and FY19 respectively.

“The built-to-suit for HP will be a major growth driver for the trust,” notes Yeo.

MINT is also scouring overseas for industrial properties to drive medium-term growth in the last two to three years, notes Yeo, and has been looking at neighboring countries, especially in locations where its sponsor has a presence.

MINT is likely to focus on data centres where it sees healthy demand and focus on bolt-on acquisition in the US and European markets, notes Yeo. MINT also has the right of first refusal on the sponsor’s Tai Sing development slated for completion at the end of the year.

Yeo also expects rents for flatted factories, which will account for 50% of the MINT’s FY17 NPI, to hold up. And although occupancy of hi-tech buildings is expected to rise sharply, there is higher vacancy risks for business parks and the stack-up/ramp-up cluster. Light industrial buildings are also affected by multi-tenanted building conversions.

“On a portfolio basis, we see higher downward pressures on occupancies vs. rents,” says Yeo.

Units of MINT are trading 1 cent higher at $1.58.

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