Mapletree Logistics Trust (SGX: M44U) Maintains Strong Results, But Valuations Seem Expensive



Mapletree Logistics Trust (SGX: M44U)'s fourth-quarter DPU went up 1% to 2.045¢. It is currently trading at 3.8% yield based on the last traded share price of $2.15 on 30 July.


Key Highlights:


  • Distribution per unit (DPU) and Dividend Yield (3.8%)

  • Price to book ratio (1.69)

  • Gearing (39.6%)

  • Interest coverage ratio (4.8x)

  • Portfolio occupancy rate (97.2%)

  • Growth catalyst


Background of Mapletree Logistics Trust


Mapletree Logistics Trust is Singapore’s first Asia-focused logistics REIT, listed on the Singapore Stock Exchange in 2005. The REIT invests in a diversified portfolio of quality, well-located, income-producing logistics real estate in Singapore, Hong Kong, Japan, China, Australia, South Korea, Malaysia and Vietnam.


1. Distribution per unit and dividend yield


In its first quarter 2021 result, Mapletree Logistics Trust delivered a healthy operational performance, with a 1% increase in DPU. Based on its latest price, the REIT is currently trading at about 3.8% dividend yield. Historically, the REIT has been paying very consistent DPU, with steady growth over the years. However, its current 3.8% yield is at the low side as compared to its average yield of 6.8% over the past 10 years.


Mapletree Logistics Trust's DPU Trend

2. Price to book ratio


Over the past 10 years, Mapletree Logistics Trust has been trading at an average price to book ratio of 1.06. Its current ratio of 1.69 does not look attractive as it is still well above its historical average and indicates a more than 60% overvalued on its net asset values.


Mapletree Logistics Trust's Price to Book Trend


3. Gearing


Portfolio leverage increased to 39.6%. The debt maturity profile is well distributed with an average duration of 4 years. There will a remaining of 4% of the total debt due this year and another 6% due in 2021.


4. Interest coverage ratio


The REIT has an healthy interest coverage ratio of 4.8 times, which is slightly above our preference of 4 times. Besides, the REIT's overall interest cost dropped to 2.3% from 2.5% in the previous quarter. 80% of its debt is under fixed rate. An increase of 0.25% in interest rate will have a small impact of 0.01 cent on DPU per quarter.


Besides, Mapletree Logistics Trust also hedged 78% of its distributable income in foreign currency.


5. Portfolio occupancy rate


Portfolio occupancy remains at a high occupancy rate of 97.2%. Its portfolio in Japan, Australia, Malaysia and Vietnam continue to maintain almost 100% occupancy rate.

Mapletree Logistics Trust's Occupancy Rate

6. Growth Catalyst


With the backdrop of Covid-19, the management believes that its has accelerated several pre-existing trends such as e-commerce growth, which should benefit the logistics market in the region. However, a prolonged Covid-19 epidemic could adversely affect the demand for warehouse space.


The management will continue to focus on proactive lease management to sustain stable occupancies and maintain a strong balance sheet with prudent cash flow management.


Summary


Mapletree Logistics Trust has been delivering very healthy financial metrics over the years. However, it is currently trading at a relatively expensive valuation. We will keep it under the watchlist at the moment.



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