Compiled by Lynette Tan
MAPLETREE LOGISTICS TRUST | BUY (MAINTAINED)
TARGET PRICE: $1.40
JAN 22 CLOSE: $1.34
OCBC Investment Research, Jan 22
Mapletree Logistics Trust (MLT) reported a strong set of Q3 FY2019 results which met our expectations.
Distribution per unit (DPU) grew at a smaller pace of 5 per cent y-o-y to 2.002 cents as a result of higher borrowing costs and a larger unit base, but this was the strongest y-o-y growth since Q1 FY2015.
Rental reversions also gathered pace during the quarter, coming in at 4.5 per cent higher, driven largely by Hong Kong, China, Singapore and Vietnam. Its portfolio occupancy held firm at 97.7 per cent (+0.1 percentage point), with only China recording a dip in occupancy rates from 98.3 per cent to 95.8 per cent.
MLT has also continued to diversify its portfolio, with logistics property acquisitions in Brisbane and South Korea.
In addition, MLT entered a conditional asset transfer agreement with Unilever International to acquire a warehouse in Vietnam.
The property is expected to generate an initial NPI yield of 8.3 per cent. Factoring these in, we raise our FY2019 and FY2020 DPU forecasts by 0.2 per cent and 2.2 per cent, respectively.
FRASERS CENTREPOINT TRUST | BUY (MAINTAINED)
TARGET PRICE: $2.55
JAN 22 CLOSE: $2.27
Maybank Kim Eng, Jan 22
Frasers Centrepoint Trust's (FCT) Q1 2019 DPU of 3.02 cents, up 0.7 per cent y-o-y, was led by improved occupancies across all assets and a 6.9 per cent higher rental reversion, driven by strong leasing momentum at Causeway Point and further entrenchment of Changi City Point as an outlet mall.
Excluding Northpoint City, overall shopper traffic was up 3.5 per cent y-o-y, while tenants' sales dipped slightly by 0.9 per cent y-o-y between September and November 2018.
Looking ahead, we see strong leasing momentum supporting renewal efforts into the rest of FY2019 (46 per cent of expiries are at Causeway Point).
FCT's 5.7 per cent DPU yield is compelling and it remains our preferred retail Reit given its strengthening suburban mall footprint, visible growth drivers, strong balance sheet and potential acquisition catalysts.
At its AGM, CEO Chew Tuan Chiong announced his intention to retire at 62 years of age after leading FCT since 2010.
A succession plan is in place and the growth strategy will remain unchanged in our view.
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