On 29 April 2024, Mapletree Logistics Trust (“MLT”) have announced their full year result for 2024. There were no significant changes to the fundamentals of MLT and noted in the overall presentation that management have used divestment gains to ensure DPU remained relatively constant despite the increase in borrowing costs. Management have indicated in their presentation of their plans to divest a few more assets over the next few quarters. Investors should assess their risk appetite to this.
Worth noting that on 15 May 2024, the share price dropped significantly by 3.68% to SGD1.31 per share. As of the time of this writing, there are no announcements from the company for the decrease. However, MLT have been removed from the MSCI Global Standard Indexes which will take place as of the close of 31 May 2024. This could be the cause of the share price decline.
Website: MSCI announces five deletions for Singapore including CDL
Website: Financial Statements And Related Announcement::Full Yearly Results
Photo source: https://blog.investingnote.com/mapletree-logistics-trust/
Background
MLT is Singapore’s first Asia-focused logistics real estate investment trust. Listed on the Singapore Exchange Securities Trading Limited in 2005, MLT invests in a diversified portfolio of quality, well-located, income producing logistics real estate in Singapore, Hong Kong SAR, Japan, China, Australia, South Korea, Malaysia, Vietnam and India.
The Manager, Mapletree Logistics Trust Management Ltd., is committed to providing Unitholders with competitive total returns through the following strategies:
- optimising organic growth and hence, property yield from the existing portfolio;
- making yield accretive acquisitions of good quality logistics properties; and
- managing capital to maintain MLT’s strong balance sheet and provide financial flexibility for growth.
Key Metrics
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | -0.1% | +0.7% |
DPU decreased by an overall 0.1% to SGD0.09003 from SGD0.09011 in the previous financial year. This was largely due to the increase in issued units despite the higher amount distributable for the financial year. Do note that the underlying net property income had remained relatively unchanged. The increase in distributable income was due to higher divestment gains offset by increase in borrowing cost in FY2024 as compared to FY2023. This metric is Neutral.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 96.0% | 95.9% |
Occupancy rate as of 31 March 2024 remained relatively consistent at 96.0%. This is Favorable as it is above my expected healthy occupancy rate of 95%. MLT have been able to fully utilize their assets.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 38.9% | 38.8% |
Gearing ratio remained relatively unchanged at 38.9% as of 31 March 2024. The metric to me remains Neutral.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 3.1x | 3.2x |
The adjusted interest coverage stands at 3.1 times as of 31 March 2024. The metric is Favorable as it is above my preference of 3.0 times. It provides a degree of buffer for interest rate increases as the Federal Reserve on 2 May 2024 has signalled that US borrowing costs are likely to remain higher for longer, as it wrestles with persistent inflation across the world’s biggest economy. This was after increasing the interest rates to a range between 5.25% and 5.50% on 26 July 2023.
Website: Federal Reserve chair Jay Powell signals interest rates will remain higher for longer
Should the interest rate increase further, MLT may be subjected to significant change in their cost of debt. In their presentation they have mentioned that 84% of their debt is also on fixed rates.
I have thus performed a sensitivity analysis using the information as of 31 March 2024:
| Description | Amount (SGD’000) |
|---|---|
| Total Debt | $5,310,000 |
| Debt Not Hedged (%) | 16.0% |
| Debt at Floating Rate Exposed | $849,600 |
| Distributable Income FY2024 | $471,489 |
Interest rate sensitivity analysis as below:
| Change in Interest Rates | Decrease in Distributable Income (SGD’000) | Change as % of FY2024 Distribution |
|---|---|---|
| + 50 bps | -$4,248 | -0.9% |
| + 100 bps | -$8,496 | -1.8% |
| + 150 bps | -$12,744 | -2.7% |
| + 200 bps | -$16,992 | -3.6% |
| + 250 bps | -$21,240 | -4.5% |
| + 300 bps | -$25,488 | -5.4% |
Do note the above is my estimation which may be different from management’s estimation. Nonetheless, if the interest rates were to increase by the basis points above, MLT may experience a fall in DPU accordingly.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.8 years | 3.7 years |
Weighted average term to maturity of their debt remains relatively unchanged at 3.8 years as of 31 March 2024. This is Favorable and it allows them sufficient time to refinance their debts as they fall due.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 0.95 | 1.11 |
The Price to Book (“P/B”) ratio currently stands at 0.95. This is computed using the closing share price of SGD1.31 on 15 May 2024 and the net asset value per share of SGD1.38 as of 31 March 2024. The metric is Favorable.
Dividend yield
| Year | Yield | Total |
|---|---|---|
| 2024 | 3.41% | SGD 0.045 |
| 2023 | 6.90% | SGD 0.090 |
| 2022 | 5.73% | SGD 0.075 |
| 2021 | 7.17% | SGD 0.094 |
| 2020 | 6.21% | SGD 0.081 |
| 2019 | 6.73% | SGD 0.088 |
With the current dividend payout of SGD0.045 per share for the first half of 2024, MLT is on track to maintain their dividend payout to be similar to the calendar year 2023. Do take note that the dividends paid are partially supported by divestment gains. There are a few more divestments lined up based on their presentation. Likelihood that management will continue this track to ensure DPU is not affected.
As of 15 May 2024, with a closing share price of SGD1.31 and expected dividend payout of SGD0.090 for the full calendar year 2024, this translates to a dividend yield of 6.82%. For my benchmark, a general reasonable range would be around an average of 5.50% to 6.50% in the current environment. MLT’s dividend yield is above my benchmark. The dividend yield is Favorable.
Website: Reasonable Dividend Yield 2024Q2
Other metrics
Tenant profile
MLT has an enlarged portfolio covering multiple trade sectors. The high quality and diverse tenant base provide resilience to the MLT portfolio across challenging events. The top-10 tenants accounted for only 22.0% of MLT’s portfolio with no single tenant accounting for more than 4.0% during the period, providing income diversity to the portfolio.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | -0.1% | Neutral |
| Occupancy | 96.0% | Favorable |
| Gearing Ratio | 38.9% | Neutral |
| Interest Coverage | 3.1x | Favorable |
| Debt Maturity Profile | 3.8 years | Favorable |
| Price to Book Ratio | 0.95 | Favorable |
| Overall | | Favorable |
Overall, the metrics indicate that it remains favorable to invest in MLT. There are no significant changes to the metrics, and MLT remained fundamentally stable this quarter. This should give investors a degree of assurance.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
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Website: Mapletree Logistics Trust (SGX: M44U): 2024 Third Quarter Result
