Mapletree Logistics Trust (SGX: M44U): 2025 Half Year Result

On 22 October 2024, Mapletree Logistics Trust (“MLT”) have announced their half year result for FY2025. This quarter has been rough for MLT, where there are worsening of metrics across the board which makes it less favorable, especially with the significant DPU drop. There may be possibilities for improvements in their fundamentals over the next few quarters, as factors such as JPY, which makes up 29% of their debt, has weakened against SGD and there may be further interest rate cuts at the time of this writing.

Keep in mind that management does not seem to have announced any substantial upcoming divestments, with only a few smaller disposals in the pipeline. This is partly a good thing as MLT should not be divesting too much from their operations as it will reduce their recurring income, though divestments could also be used to repay their debt and lower borrowing costs. It also means to say that DPU from distribution of divestment gain may potentially dry up. With the decreasing trend of DPU from operations as highlighted by REIT_TIREMENT in his blog, this is something investors should take note of and consider factoring in when assessing their risk appetite.

Website: Financial Statements And Related Announcement::Second Quarter And/or Half Yearly Results

Photo source: https://thesmartinvestor.com.sg/mapletree-logistics-trusts-dpu-dips-slightly-to-s0-09003-for-fy2024-5-highlights-from-the-logistics-reits-earnings/


Financial Highlights

Distribution Per Unit (“DPU”)

MetricsCurrentPrevious
Distribution Per Unit-9.8%-8.9%

DPU for the first half of FY2025 decreased by 9.8% to SGD0.0410 per share from SGD0.0454 per share for the same period in the previous financial year. Amount available for distribution decreased by 8.2%, approximately SGD18million, to SGD206 million. There were several factors leading to the decrease in DPU. The first being MLT seeing a decrease in their net property income and an increase in borrowing costs. This is made worst by a lower distribution of divestment gain of only SGD12 million compared to SGD17 million in the previous period, as well as an increase in total issued units at the end of the period. This metric remains Unfavorable.

For those interested, you can visit REIT_TIREMENT in the link below for a distribution breakdown. Included in the breakdown is DPU from operations which has seen to be on a decreasing trend. Something investors should take note of.

Website: Mapletree Logistics Trust’s 2Q FY24/25 Result Review

Occupancy

MetricsCurrentPrevious
Occupancy96.0%95.7%

Occupancy rate as of 30 September 2024 increased slightly to 96.0%. This metric remains Favorable as it is above my expected healthy occupancy rate of 95%. MLT have been able to fully utilize their assets.

Gearing ratio

MetricsCurrentPrevious
Gearing Ratio40.2%39.6%

Gearing ratio has increased to 40.2% as of 30 September 2024. This was due to higher net translated loans due to stronger JPY against SGD and additional loans drawn to fund asset enhancement initiatives, partly offset by loan repayments with proceeds from divestments. The metric has shifted towards Unfavorable. Worth noting that JPY has weakened against SGD as of the time of this writing. Therefore, there is a possibility that this metric improve in the next quarter.

Interest coverage

MetricsCurrentPrevious
Interest Coverage3.0x3.1x

The adjusted interest coverage remains unchanged at 3.0 times as of 30 September 2024. The metric is Favorable as it is at my preference of 3.0 times. Take note that as there is no more margin of safety, it may shift to neutral if it worsens next quarter.

Debt maturity profile

MetricsCurrentPrevious
Debt Maturity Profile3.6 years3.7 years

Weighted average term to maturity of their debt remained relatively unchanged at 3.6 years as of 30 September 2024. This metric remains Favorable as it allows them sufficient time to refinance their debts when they fall due.

Price to Book Ratio

MetricsCurrentPrevious
Price to Book Ratio1.010.95

The Price to Book (“P/B”) ratio increased to 1.01. This is computed using the closing share price of SGD1.34 on 29 October 2024 and the net asset value per share of SGD1.33 as of 30 September 2024. The metric has shifted towards Neutral as we are paying a small premium from its book value.

As of 29 October 2024, the Market Capitalization is approximately SGD6,762 million.


Dividend

YearYieldTotal
20246.39%SGD 0.086
20236.74%SGD 0.090
20225.60%SGD 0.075
20217.01%SGD 0.094
20206.07%SGD 0.081
20196.58%SGD 0.088
Extracted from Dividends.sg

With the dividend payout in the final quarter of the calendar year 2024, total dividend amounted to SGD0.086 per share. With a closing share price of SGD1.34 as of 29 October 2024, this translates to a dividend yield of 6.39%. For my benchmark, a general reasonable yield would be around 5.00%. MLT’s dividend yield is above my benchmark and is Favorable.

Website: Reasonable Dividend Yield 2024Q4 – 5.00%


Interest Rate Sensitivity

The Federal Reserve on 18 September 2024 have slashed interest rate by half a point to a range of 4.75% to 5.00%, the first time since raising it to its highs on 26 July 2023. This is a good indicator of potential future rate cuts which will greatly benefit REITs in reducing their finance costs.

Website: Fed slashes interest rates by a half point, an aggressive start to its first easing campaign in four years

Should the interest rate change, MLT may be subjected to significant change in their cost of debt. The debt profile of MLT is as below:

DescriptionAmount (SGD’000)
Total Debt$5,552,000
Debt Not Hedged (%)16.0%
Debt at Floating Rate Exposed$888,320
Distributable Income FY2024$471,489

I have performed a sensitivity analysis using the information above as below:

Change in Interest RatesChange in Distributable Income (SGD’000)Change as % of FY2024 Distribution
50 bps$4,4420.9%
100 bps$8,8831.9%
150 bps$13,3252.8%
200 bps$17,7663.8%

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 change 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 21.7% of MLT’s portfolio with no single tenant accounting for more than 3.7% during the period, providing income diversity to the portfolio.


Summary

MetricsFinancialsRating
Distribution Per Unit-9.8%Unfavorable
Occupancy96.0%Favorable
Gearing Ratio40.2%Unfavorable
Interest Coverage3.0xFavorable
Debt Maturity Profile3.6 yearsFavorable
Price to Book Ratio1.01Neutral
OverallNeutral

The overall metrics has shifted towards Neutral. MLT previously was on the edge, and it was noted in this quarter that there are some slight weakening of their fundamentals. Do note that the DPU downtrend seems to be consistent over the last few quarters. Something investors will need to keep in mind looking forward.

Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.


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.

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Website: Mapletree Logistics Trust (SGX: M44U): 2025 First Quarter Result


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