Listed in 2005, Mapletree Logistics Trust (MLT) owns a diverse portfolio of income-producing logistics properties located across Singapore, Japan, China, Korea, Australia, Malaysia, and Vietnam. As of 24 July 2019, MLT is worth S$5.8 billion in market capitalisation, making it one of the largest logistics REITs in Singapore.
In this article, I’ll cover its recent developments, latest annual results, and stock valuation. Here are 12 things to know about MLT before you invest:
1. As of 31 March 2019, MLT’s portfolio comprised 141 properties worth S$8.0 billion, up from 124 properties worth S$6.5 billion the year before. This rise in portfolio value is attributable to the following acquisitions:
| FY2019 Acquisitions | Acquisition Date | Purchase Price (S$ million) |
|---|---|---|
| 50% stake in 11 properties in China | 6 Jun 2018 | 575.3 |
| Five logistics properties in Singapore | 28 Sep 2018 | 775.9 |
| Coles Brisbane Distribution Centre | 28 Nov 2018 | 100.7 |
| Mapletree Logistics Centre - Wonsam 1 | 29 Nov 2018 | 45.4 |
| Unilever VSIP Distribution Centre | 30 Jan 2019 | 42.4 |
MLT also disposed two assets in Singapore during the financial year for a total sum of S$90.4 million:
| FY2019 Disposals | Disposal Date | Disposal Price (S$ million) |
|---|---|---|
| 7 Tai Seng Drive | 27 Jun 2018 | 68.0 |
| 531 Bukit Batok Street 23 | 18 Oct 2018 | 22.4 |
Over the last six years, portfolio value has grown at a compound annual growth rate (CAGR) of 12.0% from S$4.1 billion in 2013 to S$8.0 billion in FY2019:
2. Revenue and grew 15.0% year-on-year (YoY) to S$454.3 million in FY2019, and distributable income grew 26.8% YoY to S$270.0 million in FY2019. Distributable income growth outpaced revenue growth due to distribution of disposal gains of S$11.1 million from the two divested properties in Singapore.
3. Distribution per unit (DPU) grew 4.2% YoY to 7.94 cents in FY2019. DPU growth was lower than distributable income growth as MLT issued 564.2 million new units during the year in two separate private placement exercises to acquire five logistics properties in Singapore and a 50.0% interest in 11 logistics properties in China.
4. As at 31 March 2019, MLT has a gearing ratio of 37.8%. Its weighted average interest rate is 2.7%, and 84% of debt is hedged at fixed interest rates. Average debt to maturity is 4.1 years and no more than 24% of debt is due in any single year.
5. As of 31 March 2019, portfolio occupancy rate is 98.0%, up from 96.6% the year before. MLT has maintained a portfolio occupancy rate above 95.0% in the last seven years. The REIT has a diversified base of over 630 tenants and its top 10 tenants contributed 29% of total revenues in FY2019:
| Top 10 Tenants | Percentage of Total Revenue |
|---|---|
| CWT Pte Ltd | 9.2% |
| Coles Group | 4.4% |
| Equinix | 3.0% |
| Ever Gain Company Ltd | 2.3% |
| SBS Holdings | 1.9% |
| XPO Worldwide Logistics | 1.9% |
| Adidas Hong Kong Ltd | 1.7% |
| Nippon Access Group | 1.7% |
| Nippon Express | 1.7% |
| Bidvest Group | 1.5% |
MLT has a weighted average lease expiry (WALE) of 3.8 years, and 57.7% of leases will only expire in FY2022 and beyond:
6. In FY2019, CWT Pte Ltd became MLT’s largest rental income contributor, accounting for 9.2% of gross revenue. This is due to MLT’s acquisition of five Singapore logistics properties during the financial year — 4 Pandan Avenue, 52 Tanjong Penjuru, 38 Tanjong Penjuru, 6 Fishery Port Road, and 5A Toh Guan Road East. These five properties are currently leased to CWT and have a WALE of 8.7 years. In April 2019, CWT International Ltd — the Hong Kong-listed parent company of CWT Pte Ltd — failed to pay accrued interest of HK$63.0 million on a HK$1.4 billion loan. On 16 April 2019, MLT released a statement that CWT Pte Ltd will continue to operate as normal and has not defaulted on its rental payments. MLT also has a six-month rental deposit for CWT leases. Nonetheless, this incident caused MLT’s credit rating by Moody’s to dip from ‘Baa1’ to ‘Baa2’.
7. As of 31 March 2019, MLT has a weighted average land lease to expiry of 43.8 years for its 95 leasehold assets. The REIT also has 42 freehold assets.
8. On 10 April 2019, MLT disposed five logistics properties in Japan for S$213.3 million. The amount 21% above the combined appraised value of S$175.7 million, and 13% above their original purchase cost and capital expenditures. Hence, MLT now has a portfolio of 137 properties worth S$7.6 billion.
9. MLT is redeveloping Ouluo Logistics Centre in China in two phases. The redevelopment will expand the property’s gross floor area by 2.4 times to 80,700 square metres and is estimated to cost S$70 million. Phase 1 of the redevelopment was completed in September 2018 and is currently fully occupied. Phase 2 commenced in October 2018 and is targeted for completion in March 2020.
10. Mapletree Investments Pte Ltd is the sponsor and largest shareholder of MLT with a 31.6% stake as of 31 May 2019. Mapletree Investments has 56 logistics development projects in Asia, 50 of which are located in China. This gives MLT a long pipeline of potential acquisitions from its sponsor in the future.
11. P/B ratio: As of 31 March 2019, MLT has a net asset value per unit of S$1.15. Based on MLT’s share price of S$1.60 (as at 24 July 2019), its current P/B ratio is 1.39, the highest since 2013.
12. Dividend yield: MLT paid 7.94 cents in DPU in FY2019. Therefore, its current dividend yield is 4.96%, the lowest since 2013.
The fifth perspective
Mapletree Logistics Trust has delivered consistent growth in revenue, distributable income, and DPU over the last six years. However, its recent price run means its valuation metrics are above their historical averages at the moment.
Moving forward, MLT is focusing on China for growth as its sponsor has a portfolio of logistics development projects located in the country as it aims to capitalise on China’s rising affluence levels, rapid growth in e-commerce sales, and implementation of Belt and Road initiatives. Investors do, however, have to take note of CWT and its ongoing developments as it remains MLT’s largest revenue contributor.
