On 24 July 2024, Mapletree Logistics Trust (“MLT”) have announced their first quarter result for FY2025. DPU definitely saw a notable decrease this quarter, and the payout for the final quarter of 2024 is likely to be similar to what we are receiving in September 2024 unless management decides to increase their dividends using divestment. The metrics in the other areas also saw slightly worsening this quarter, though they remained relatively constant as compared to the previous quarter. There is some stability which should give assurance to investors as we look forward to the month of September and potential interest rate cuts.
Website: Financial Statements And Related Announcement::First Quarter Results
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 | -8.9% | -0.1% |
DPU for the first quarter of FY2025 decreased by 8.9% to SGD0.0206 from SGD0.0227 for the same period in the previous financial year. This was due to a combination of increase in issued units, a decrease in net property income and higher borrowing costs. This metric is Unfavorable.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 95.7% | 96.0% |
Occupancy rate as of 30 June 2024 decreased slightly to 95.7%. 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 | 39.6% | 38.9% |
Gearing ratio has increased significantly to 39.6% as of 30 June 2024. The metric to me remains Neutral, though worth noting it is close to the unfavorable region.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 3.1x | 3.1x |
The adjusted interest coverage remains unchanged at 3.1 times as of 30 June 2024. The metric is Favorable as it is above my preference of 3.0 times.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.7 years | 3.8 years |
Weighted average term to maturity of their debt remains relatively unchanged at 3.7 years as of 30 June 2024. This metric remains Favorable as it allows them sufficient time to refinance their debts when they fall due.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 0.95 | 0.95 |
The Price to Book (“P/B”) ratio remains unchanged at 0.95. This is computed using the closing share price of SGD1.30 on 16 August 2024 and the net asset value per share of SGD1.37 as of 30 June 2024. The metric is Favorable as we are paying a small discount from its book value.
Dividend
| Year | Yield | Total |
|---|---|---|
| 2024 | 5.02% | SGD 0.065 |
| 2023 | 6.95% | SGD 0.090 |
| 2022 | 5.78% | SGD 0.075 |
| 2021 | 7.22% | SGD 0.094 |
| 2020 | 6.26% | SGD 0.081 |
| 2019 | 6.78% | SGD 0.088 |
With the current dividend payout of SGD0.065 per share for the first nine months of 2024, if MLT pays a dividend on SGD0.020 per share in the fourth quarter of 2024, total dividend is likely to amount to SGD0.085 per share for the calendar year 2024.
With a closing share price of SGD1.30 as of 16 August 2024, this translates to a dividend yield of 6.54%. For my benchmark, a general reasonable yield would be around 5.75%. MLT’s dividend yield is above my benchmark and is Favorable.
Website: Reasonable Dividend Yield 2024Q3 – 5.75%
Interest Rate Sensitivity
The Federal Reserve on 1 August 2024 kept its key interest rate at 5.25% to 5.50% ever since raising it on 26 July 2023. However, citing “some further progress” toward its 2% inflation goal, Fed Chair Jerome Powell at the press conference said a rate cut in September is “on the table,” provided the inflation data continues to be encouraging.
Website: Fed recap: Chair Powell gives the September rate cut signal traders were hoping for
Should the interest rate increase further, MLT may be subjected to significant change in their cost of debt. The debt profile of MLT is as below:
| Description | Amount (SGD’000) |
|---|---|
| Total Debt | $5,489,000 |
| Debt Not Hedged (%) | 17.0% |
| Debt at Floating Rate Exposed | $933,130 |
| Distributable Income FY2024 | $471,489 |
I have performed a sensitivity analysis using the information above as below:
| Change in Interest Rates | Decrease in Distributable Income (SGD’000) | Change as % of FY2024 Distribution |
|---|---|---|
| + 50 bps | -$4,666 | -1.0% |
| + 100 bps | -$9,331 | -2.0% |
| + 150 bps | -$13,997 | -3.0% |
| + 200 bps | -$18,663 | -4.0% |
| + 250 bps | -$23,328 | -4.9% |
| + 300 bps | -$27,994 | -5.9% |
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.
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 22.1% 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 | -8.9% | Unfavorable |
| Occupancy | 95.7% | Favorable |
| Gearing Ratio | 39.6% | Neutral |
| Interest Coverage | 3.1x | Favorable |
| Debt Maturity Profile | 3.7 years | Favorable |
| Price to Book Ratio | 0.95 | Favorable |
| Overall | Favorable |
Overall, the metrics indicate that it remains Favorable to invest in MLT. Noted that DPU is on a downtrend but currently is still able to provide a decent yield. With the other fundamentals of MLT remaining stable, this should give investors some assurance as we look towards potential interest rate cuts in the future.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
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Mapletree Logistics Trust (SGX: M44U): 2024 Full Year Result
