SINGAPORE (Jan 25): DBS Group Research is maintaining its “buy” on Mapletree Logistics Trust (MLT) with a target price of $1.15, saying the REIT remains attractive for its steady DPU growth profile of 2-3% driven by an actively managed portfolio and regular asset acquisitions.
“We see MLT remaining on a growth path. “Buy” maintained, yield of 7.0-7.1% is attractive for a strong quality name,” says analyst Derek Tan in a Tuesday report.
DBS is also looking forward to more acquisitions and developments to drive growth. The issuance of $250 million perpetual securities in May 2016 @ 4.18% has enabled MLT to lock in attractive long-term funding for the REIT.
Since then, it has deployed close to $313 million into acquisitions at yields ranging 7.1%-9.9%.
“With gearing already at 38%, we see the REIT looking to monetise assets and re-deploying proceeds into acquisitions as a key focus area in FY17-18F,” says Tan.
That said, MLT continues to enjoy a myriad of acquisition opportunities from its sponsor, and third parties in Australia, Korea, and China.
In 3Q17, MLT’s results in line. Top line and net property income were up 7.1% and 7.7% y-o-y respectively. Higher revenues were mainly driven by acquisitions. Distributable income was 5.8% higher while DPU was flat mainly due to higher interest incurred on the issuance of close to $250 million worth of perpetual securities.
(See also: Mapletree Logistics Trust declares 3Q DPU of 1.87 cents, unchanged from a year ago)
“We maintain our “buy” call and target price of $1.15. The stock offers a total potential return of 16% (9% share price upside, 7% yield),” says Tan.
Units of MLT are trading at $1.06.
