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REITs investing & personal finance

Thursday, July 30, 2020

Mapletree Industrial Trust Analysis @ 30 July 2020

Basic Profile & Key Statistics
Mapletree Industrial Trust (MIT) mainly invests in industrial properties. Its portfolio includes data centres and business parks as well.

Lease Profile
Occupancy is slightly low at 91.1%. WALE is moderate at 4.2 years where the highest lease expiry of 18.6% falls in FY22/23. Weighted average land lease expiry is short at 46.83 years, which is normal for 100% Singapore properties. 

Debt Profile
Gearing ratio of 38.8% is slightly high. Cost of debt of 2.6% is slightly low despite 100% unsecured debt. Fixed rate debt is high at 86.3%. Interest Cover Ratio is high at 7.2 times. WADE is long at 3.9 years where the highest debt maturity of 26.1% falls in FY 24/25.

Diversification Profile
Based on the past 4 quarters gross revenue, 94.5% is from Singapore properties,  This figure would be reduced as MIT will have more contributions from the recent acquisition of data centres in US. MIT is diversified in terms of both properties and tenants. Its top property, top tenant, and top 10 tenants contribute 10.9%, 8.4% and 28.5% respectively.

Key Financial Metrics
Property Yield is very high at 7%. Management fee is moderate in which shareholders receive S$ 7.56 for every dollar paid. Distribution on capital and distribution margin are high at 5.2% and 60.4% respectively.

Related Party Shareholding
Sponsor and directors of REIT manager holding higher stake than SREITs median level while REIT manager holding lesser stake than SREITs median.

Both DPU (without retention) and NAV per unit are on uptrend while distribution margin is maintained throughout the past 5 years.

Fundamental Valuation
Plus Points Negative Points
Well Spread Lease Expiry Weighted Averaged Land Lease Expiry
Unsecured Debt Top Geographical Contribution
Interest Cover Ratio
Well Spread Debt Maturity
Top Property Contribution
Top Tenant & Top 10 Tenants Contribution
Property Yield
Distribution on Capital
Distribution Margin
DPU Uptrend
NAV per Unit Uptrend
I guess it requires no further explanation by just looking at the table above. Its performance is very solid, same as per its counterpart, Mapletree Logistics Trust. 

Relative Valuation
i) Average Dividend Yield
Apply past 4 quarters DPU of 12.01 cents to average value of 6.18% will get S$ 1.94. If we apply DPU without retention of 12.63 cents, will get S$ 2.04
ii) Average Price/NAV 
Apply NAV of S$ 1.619 to average value of 1.34 will get S$ 2.17.

Author's Opinion
MIT fundamental is very solid as per MLT, the recent acquisition of data centres has pushed up the price to another higher level. For valuation: 
i) Fundamental Intrinsic Value = (Removed)
ii) Relative Valuation - Dividend Yield = S$ 2.04
iii) Relative Valuation - Price/NAV = S$ 2.17
At the current price of S$ 3.24, it looks overvalued. Again, like MLT, should we buy a wonderful company at a wonderful price? 

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Please always do your own due diligence before any decision is made.

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