Lower DPU but positive rental reversions for Mapletree Industrial Trust leave analysts mixed
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Mixed reactions have emerged following the results of Mapletree Industrial Trust (MINT) for the 1QFY2024 ended June 30. OCBC Investment Research (OIR), DBS Group Research and CGS-CIMB Research, who have retained their “add” and “buy” calls, have reported that during the quarter, MINT’s gross revenue and net property income (NPI) increased by 1.7% and 0.7% respectively, reaching $170.6 million and $130.8 million. Additionally, the trust’s distribution per unit (DPU) rose 1.8% quarter-on-quarter, but dipped 2.9% year-on-year to 3.39 cents.
Being the most hopeful, the research team at OIR increased their target price from $2.77 to $2.78. On the other hand, CGS-CIMB has maintained their target price for MINT at $2.61 due to its “healthy balance sheet” and “increasing exposure to the new economy sectors”. As for DBS analysts Derek Tan and Dale Lai, their “buy” call was kept, albeit with a reduced target price of $2.60.
MINT’s portfolio occupancy rate declined 1.6 percentage points (ppt) quarter-on-quarter to 93.3%, with both its Singapore and North American portfolios seeing a drop of 1.7 ppt and 1.3 ppt, respectively. MINT attributed some of the vacancies to be transitory and on average their rental reversions stayed positive at 5.3%. In light of this, the OIR team praised MINT’s “sizeable portfolio” of industrial assets and successful data centres portfolio in the US and Canada, noting that investors can gain “a proxy to the fast-growing digitalisation and data outsourcing trends”.
MINT has also announced a proposedJPY52 billion ($507.9 million) acquisition of a data centre in Osaka, potentially increasing their exposure to data centres to 56.3% of FY2023 assets under management (AUM). Subsequently, Lock Mun Yee and Natalie Ong of CGS-CIMB noted that with more Japanese yen loans taken to finance the purchase, the overall blended funding cost should trend down over the next few quarters.
Maybank analysts, who have maintained their “hold” call with an unchanged target price of $2.30, have tweaked their DPU estimates to reflect operating trends. Krishna Guha of Maybank has expressed his concern over a slowdown in the local manufacturing sector, the possible non-renewal of US leases, and a fluid funding environment.
As at 11.55am, MINT’s shares are trading 3 cents lower or 1.32% down at $2.24.