Brokers’ take: Analysts positive on Mapletree Logistics Trust, mixed on target price

MAYBANK has cut its target price on Mapletree Logistics Trust (MLT) to S$1.60, from S$1.80 previously, to factor in lower contributions from China.

The trust recently reported its results for the second quarter of its financial year, which ends in March 2024.

“Occupancy and reversions softened mainly due to China,” Maybank analyst Krishna Guha noted in his report.

He lowered his distribution per unit forecast by 0.5 per cent on China headwinds.

He noted, however, that MLT has demonstrated “disciplined execution”, and is keeping his “buy” call on the stock.

OCBC Investment Research has also trimmed its target price – to S$1.72, from S$1.85.

This was to account for a higher assumed cost of equity in this “higher-for-longer interest rate environment”.

“Rising borrowing costs and more challenging conditions in China are likely to weigh on its distributable income growth in the near term,” the analysts said.

DBS analysts Derek Tan and Dale Lai were more positive, maintaining their “buy” call and S$1.88 target price.

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Their target price assumes a discount rate of 6.8 per cent, an FY2024 yield of 4.7 per cent and a price-to-net asset value (P/NAV) ratio of 1.3 times.

They continue to like MLT for its “unique regional platform” as well as its exposure to the fast-growing e-commerce sector, which is driving high retention rates and reversionary growth.

While China has acted as a dampener, MLT’s diversified platform – with 80 per cent of revenue coming from markets with stable demand-supply dynamics – should remain resilient.

“We believe that the high earnings visibility, which is a welcome trait given the ongoing economic uncertainties, implies that the Reit’s premium to NAV is fair,” they added.

DBS also noted that MLT has been on an acquisition path, and has a pipeline of properties estimated to be valued above S$2 billion.

“This visibility and availability of a pipeline from its sponsor is a unique trait that its peers do not enjoy.”