- In China, growth from e-commerce has slowed. The huge logistics supply of 12m sqm in 2023 has pushed the nationwide vacancy rate to a high of 23%. We are concerned that the weakness from China could persist and last longer than the 6-12 months guided by management of Mapletree Logistics Trust (SGX:M44U).
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- Mapletree Logistics Trust provides FY25 distribution yield of 5.6% (vs Frasers Logistics & Commercial Trust: 7.0%).
China’s logistics market in dire straits.
- Consumer spending in China is weighted down by negative wealth effect caused by falling prices in the residential property and stock markets. China’s online retail sales of goods & services slowed to 11.9% y-o-y in Dec 23 due to weakness in consumer confidence.
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Risk from prolonged downturn in China.
- Mapletree Logistics Trust (SGX:M44U)’s management cautioned that demand is expected to be soft over the next 6-12 months. Tier 1 cities saw positive rental reversion of 2% but Tier 2 cities suffered negative reversion of 17% in 3QFY24. Management expects continued negative rental reversion at high single digits to low teens.
- Occupancy for China was stable at 93.1% in 3QFY24. Occupancy for Tier 1 cities has deteriorated by 4ppt q-o-q to 91%, while occupancy for Tier 2 cities was stable at 93%.
Prudent capital management.
- Read more at SGinvestors.io.
