Mapletree Industrial Trust 1QFY23 - Occupancy And Reversions Trending Up
- Mapletree Industrial Trust (SGX:ME8U) reported a 31%/11.4% y-o-y rise in 1QFY23 (1 Apr 2022 to 30 Jun 2022) revenue/distribution income to S$167.8m/S$92.1m, due largely to acquisition of a US data centre (DC) portfolio in North America, partly offset by higher borrowing costs and management fees. 1Q DPU rose 4.2% y-o-y, but was flat q-o-q, to 3.49 cents.
- Mapletree Industrial Trust’s gearing stood at 38.4% at end-1Q. An estimated 72.3% of its debt has been hedged into fixed rates and management indicated that a 50bp increase in average funding cost could erode DPU by 0.02-0.03 cents/quarter.
- Mapletree Industrial Trust's portfolio occupancy ticked up 1.3% pt to 95.3% in 1Q, with Singapore portfolio occupancy at 96%. The improvement was across the board with the strongest pick-up from business parks and flatted factories.
- Mapletree Industrial Trust enjoyed positive rental reversions of 2.9% in 1Q (vs. 1.1% in 4Q). Looking ahead, Mapletree Industrial Trust has 10.6%/18.3% of its gross rental income to be renewed in 9MFY23 and FY24F, mainly from its Singapore flatted factories, hi-tech buildings and US data centres. Management retained a cautious outlook on rental reversion citing macro uncertainties and would adopt a tenant retention strategy for its portfolio.
- In addition, Mapletree Industrial Trust's management indicated that higher utilities costs would likely impact margins as its contracts were renewed towards end of 1QFY23. We estimate the increase in utilities cost could amount to ~2-3% of NPI margin per quarter and have reflected this in our current projections.
- Mapletree Industrial Trust’s US data centre (DC) portfolio had an average occupancy of 94% as at end-1Q. Mapletree Industrial Trust still remains on the lookout for inorganic growth opportunities, although it indicated that cap rates for US data centre assets are still compressed and transactional activity has slowed.
- We keep our FY23-25F DPU estimates for Mapletree Industrial Trust unchanged but tweak down our DDM-based target price to S$2.97 as we adopt a slightly higher cost of capital of 7.49% (vs. 7.21% previously). We continue to like Mapletree Industrial Trust’s portfolio diversification strategy into new economy assets.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2022-07-26 2022-07-26
Previous report by CGS-CIMB:
2022-04-27 Mapletree Industrial Trust - Strong Performance Boost From Data Centre
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