Brokers' take: Analysts cut MLT targets but remain positive on resilient operations

ANALYSTS on Friday (Apr 29) shaved their target prices on Mapletree Logistics Trust : M44U 0% (MLT) but remained positive on the real estate investment trust (Reit) for its earnings resilience. Both research teams from DBS Group Research and Maybank Securities have maintained their “buy” calls on the counter.

This comes as the Reit posts a 5 per cent rise in distribution per unit (DPU) of S$0.02268 for the fourth quarter ended March, from S$0.02161 in the year-ago period, despite an enlarged unit base. The amount distributable to unitholders rose 16.7 per cent to S$108 million in Q4.

DBS has lowered its target price to S$2.05 from S$2.35 to account for higher discount rate assumptions, although it adjusted its earnings estimates slightly upwards to account for recently announced acquisitions.

DBS's new target price implies a potential upside of 13.3 per cent from MLT’s last trading price of S$1.81 as at 2.53 pm on Friday. The counter was trading 1.7 per cent or S$0.03 higher at the time.

Meanwhile, Maybank cut its target price on MLT to S$2.25 from S$2.35. The new target represents a potential upside of 24.3 per cent.

Although MLT’s results were in line with Maybank’s and consensus estimates, the research team said it is pencilling in slower growth assumptions for the Reit’s China assets. It has cut its DPU estimates by 2 to 3 per cent as a result.

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Although the Reit’s manager expects the portfolio to remain resilient, it is keeping a close watch on its China assets, where the current Covid-19 wave has resulted in lockdowns and business disruptions.

That being said, MLT’s DPU visibility “remains high”, underpinned by resilient occupancy from steady demand growth and rental recovery in FY2023, for its well-placed logistics assets under management, Maybank noted.

DBS said there is potential upside from any organic and inorganic growth for MLT, as it rides on robust fundamentals for logistics properties post-Covid-19.