SINGAPORE (Apr 28): Despite supply chain disruptions globally as countries go on lockdown to curb the spread of the coronavirus, market watchers are staying cautiously optimistic on Mapletree Logistics Trust (MLT).
“We remain comfortable that MLT’s pure logistics exposure is least impacted by the Covid-19 outbreak and Singapore’s tightening restrictions on workspaces,” says DBS Group Research lead analyst Derek Tan in an April 27 report.
Tan opines that the logistics sector is less impacted by movement control measures. “This implies that its earnings profile will remain more stable than peers,” he says.
DBS is keeping its “buy” recommendation on MLT with an unchanged target price of $1.85.
Meanwhile, Maybank Kim Eng Research has increased its target price by 10 cents to $1.85 as well. However, the brokerage is keeping its “hold” call on MLT.
“Management remains cautious on lower demand visibility with heightened government-led measures in Singapore and Malaysia, and expects a slower acquisition growth profile in FY2021,” says Maybank analyst Chua Su Tye in an April 26 report.
The way Chua sees it, MLT has limited DPU growth upside to its 5.0% dividend yield valuation.
The trust reported a 1.2% rise in DPU to 2.048 cents for the 4QFY2019/20 ended March, bringing full-year DPU to 8.142 cents, a 2.5% increase from the previous year.
Revenue for the quarter saw a 5.5% increase to $128.1 million, led by higher revenue contributions from existing properties and accretive acquisitions in Malaysia, Vietnam, South Korea and Japan.
See: Mapletree Logistics Trust posts 1.2% rise in 4Q DPU to 2.048 cents, warns of impending Covid-19 uncertainties
“Our earnings estimates are further moderated by 1-3% to conservatively assume negative reversions in Singapore and Hong Kong, and slower acquisition assumptions,” says DBS’ Tan.
While the analyst is optimistic that MLT can still deliver acquisitions, he now believes these are likely to only happen towards the end of 2HFY2021 onwards.
“We moderate our forecast to $350 million worth of acquisitions in FY2021, funded by 40% debt and 60% equity,” Tan says. “This has not been priced in by consensus at this point.”
As at 11.11am, units in MLT are trading 1 cents lower, or down 0.6%, at $1.79.