Is Mapletree Logistic Trust A Good Buy? [Fundamental Analysis]
In this article, we'll conduct a fundamental analysis and review of Mapletree Logistic Trust and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.
Information Is Accurate Up To June 24
Business Description
Mapletree Logistics Trust (MLT) is an Asia-focused industrial REIT focusing on logistics real estate.
What I Like About MLT:
Management has displayed competency in their capital management strategy to ensure that the balance sheet remains healthy (Figure 4 & 5)
Management has displayed competency in managing their property portfolio in a manner that ensures a consistent level of the underlying land lease while mitigating the impact of lease decay. This is especially important given that both Singapore and China properties have a low underlying land lease of around 30 to 50 years. (Figure 10)
Tenants are well diversified across the region and industries. The overall portfolio occupancy rate has also remained resilient over the years. (Figure 9)
What I Do Not Like About MLT
Highly exposed to FX risk, which is inevitable. That being said, the management has been consistent in managing their FX risks via hedging.
Current portfolio allocation may not be optimized for how the future global supply chain would be. (Due to the trend of Friendshoring)
Updates From Recent Performance (FY 2023/4)
General Comments:
Gross Revenue improved by 0.4% while Net Property Income remained flat. DPU from operations suffered a 9% decline as a result of muted performances at the back of a larger unit base and losses from the foreign exchange rate.
During the financial year, MLT announced and/or completed 4 acquisitions in developing markets like India and Vietnam and 8 acquisitions in developed markets like Japan, Australia and South Korea.
Positive Headwinds:
Expected strong growth in Asia’s consumption and e-commerce will drive demand for logistics and e-commerce in the region.
Excluding China, the overall weighted average rental reversion for MLT’s portfolio was 7.7%.
Negative Headwinds:
A higher for longer interest rate environment is expected to increase the borrowing cost of MLT in the next 24 months as around 20% of their debt is due for refinancing.
China’s weaker-than-expected post-Covid economic recovery coupled with a high supply of warehouse space is contributing to a challenging leasing environment and is expected to persist in the near future. ·
Shifting supply chain structure – as a result of political headwinds and preference for service level over cost efficiency – will pose a challenge to MLT's current portfolio given their allocation in the Chinese markets.
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Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).
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Disclaimer:
This article is meant to be the opinion of the author
This article is for information purposes only
This article should not be seen as financial advice
This advertisement has not been reviewed by the Monetary Authority of Singapore
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