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Broker's take: DBS upgrades Mapletree Commercial Trust to a 'buy', target price S$1.63
DBS Group Research on Thursday upgraded Mapletree Commercial Trust (MCT) to a "buy" from a "hold", and pegged its new target price at S$1.63 a unit instead of S$1.46, after the trust posted better than expected third quarter FY2015 results.
"Looking ahead, we expect positive retail and office reversions, as well as sustained NPI (net property income) margin improvement, to drive earnings growth,'' its analysts said.
"We have raised our TP (target price) to S$1.63 as we roll forward our valuations and adjust our beta assumptions in line with other retail S-REITs. At its current price, MCT offers investors FY15-16 DPU yield of 5.4%-5.8%, and a total return of 16%. As such, we upgrade our call to BUY,'' they said.
MCT's third-quarter FY2015 revenue and NPI rose 6.5 per cent and 10.7 per cent to S$73 million and S$55 million respectively, as strong rental reversions and higher occupancy rates at Vivocity were accompanied by lower utilities costs across the portfolio. As a result, DPU rose 11.5 per cent year-on-year to 2.08 Singapore cents, slightly ahead of the analysts' estimates.
At 10.17am on Thursday, MCT is trading around S$1.49 a unit, up 1.5 cents, or one per cent.