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REITs investing & personal finance

Tuesday, July 28, 2020

Mapletree Logistics Trust Analysis @ 28 July 2020

Basic Profile & Key Statistics
Mapletree Logistics Trust (MLT) listed on 28 July 2005, which is just nice 15 years ago. MLT invests in logistics properties in various countries like Singapore, Hong Kong, Japan, China, Australia, South Korea, Malaysia, and Vietnam. MLT is sponsored by Mapletree Investments Pte Ltd.

Lease Profile
Both occupancy of 97.2% and WALE of 4.3 years are at healthy level. The highest lease expiry of 24.2% falls in FY21/22. Income in SGD/major currencies is low at 53.7%., which means around 46.3% of income received in non SGD or major currencies. Weighted average land lease expiry is short at 51.41 years.

Debt Profile
Gearing ratio is slight high at 39.6%. Cost of debt is low at 2.3% despite high 90.5% of unsecured debt. Interest cover ratio is high at 4.8 times. WADE of 4 years is long and its highest debt maturity of 22% falls in FY24/25.

Diversification Profile
MLT is very diversified in terms of geographical, property, and tenants. Its top geographical and top property contribute 35.6% and 10.4% respectively. Where its top tenant and top 10 tenants contribute 8.9% and 27.9% respectively.

Key Financial Metrics
Property yield of 5.5% is the SREITs median level, its distribution on capital of 3.8 % is slightly higher than SREITs median level. MLT management fee is at the high side where unitholder receive S$ 5.43 for every dollar paid. Distribution margin of 58.8% is high. Around 3.2% of distribution is from distribution from asset disposal.

Related Party Shareholding
Both sponsor and REIT manager hold a significant stake in MLT while directors of REIT manager shareholding is low.

All DPU, NAV per unit and distribution are on uptrend, which is very solid .

Fundamental Valuation
Favorable Less Favorable
Cost of Debt Income in SGD/Major Currencies
Unsecured Debt Weighted Average Land Lease Expiry
Interest Cover Management Fees
Well Spread Debt Maturity
Top Geographical Contribution
Top Property Contribution
Top 10 Tenants Contribution
Distribution Margin
DPU Uptrend
NAV per Unit Uptrend
Distribution Margin Uptrend
Based on the above table, it is very obvious that MLT fundamental is good. 

Relative Valuation
i) Average Dividend Yield
Apply past 4 quarters DPU of 8.162cents to average value of 6.27% will get S$ 1.30.
ii) Average Price/NAV 
Apply NAV of S$ 1.205 to average value of 1.16 will get S$ 1.40.

Author's Opinion
Solid fundamental is all I could say for MLT. In fact, other Mapletree family REITs are doing well too except for Mapletree North Asia Commercial Trust which is laggish due to Hong Kong situation. For valuation: 
i) Fundamental Intrinsic Value = (Removed)
ii) Relative Valuation - Dividend Yield = S$ 1.30
iii) Relative Valuation - Price/NAV = S$ 1.40
At the current price of S$ 2.11, it looks overvalued. Should we buy a wonderful company at 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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