Brokers' take: Analysts positive on MLT's stable results, increased distribution yield

ANALYSTS are positive on Mapletree Logistics Trust's (MLT) M44U ability to deliver stable results and maintain healthy debt levels.

The real estate investment trust (Reit) had on Friday (Jan 28) posted a 5.8 per cent on-year increase in distribution per unit (DPU) to 2.185 Singapore cents for its third quarter ended Dec 31, 2021, from 2.065 cents a year ago.

In a report on Monday, UOB Kay Hian upgraded MLT to a "buy" call, noting that a price correction - since the counter's recent peak in August 2021 - had raised its FY2023 distribution yield to 5.1 per cent.

The brokerage, however, maintained its target price of S$2.08. It kept forecasts for MLT's FY2023 DPU relatively unchanged as the positive impact from the Reit's acquisition of properties in China, Vietnam and Japan was offset by a mild increase in cost of debt.

MLT's gearing ratio as at end-December was 34.7 per cent with an average debt duration of 3.5 years, but this is expected to increase to 39.1 per cent upon the completion of the proposed acquisitions of 16 properties in China and Vietnam.

Meanwhile, DBS Group Research on Sunday also said MLT's distribution yield of 5.1 per cent is a level not seen in 2 years despite the Reit continuing to deliver on its performance, and the counter is "one of the key stocks that investors should be vested in".

The brokerage expects investors will turn positive on the stock, due to a rosy growth outlook and renewed optimism that the manager will be working to grow distribution and net asset value. DBS has a "buy" call and target price of S$2.35 on MLT.

As for Maybank, it expects resilient occupancies from steady demand growth and upside to rents in FY2023 will likely continue to boost MLT's DPU moving forward.

In a report on Sunday, the brokerage noted that demand is likely led by e-commerce tenancies and third-party logistics providers, with room for stronger rental recovery in coming quarters. It has a "buy" call and target price of S$2.35 on the counter.

Units of MLT finished unchanged at S$1.69 at Monday's close.

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