SINGAPORE (July 24): OCBC Investment Research is maintaining its “buy” call on Mapletree Logistics Trust (MLT) with a fair value estimate of $1.34, after its manager posted a set of 1Q19 results which came in line with the research house’s expectations at 25.2% of FY19 forecasts.

The research house continues to like MLT for the strong divestment gains it recorded in the latest quarter under review, as well as positive rental reversions on an operational basis.

See: Mapletree Logistics Trust posts 3.7% rise in 1Q DPU to 1.957 cents; recommences distribution reinvestment plan

To recap, the REIT booked a net divestment accounting gain of $34.3 million in 1Q19, which resulted from MLT’s completion of its divestment of 7 Tai Seng Drive to its sister REIT, Mapletree Industrial Trust.

In a Tuesday report, analyst Andy Wong says the significant divestment gain was because of the asset’s potential to be upgraded into a data centre, which he believes is not MLT’s forte.

“We raise our FY19F and FY20F DPU by 1.6% and 1.1%, respectively, as we had previously assumed that management would retain some of the divestment gains to be redeployed for acquisitions,” says the analyst.

“We have not factored in MLT’s recent proposed acquisition of five ramp-up logistics properties in Singapore as we await details of the funding structure and approvals from the shareholders of CWT International Limited,” he adds.

As at 10:36am, units in MLT are trading flat at $1.28, implying a FY19F DPU yield of 6.2%.