Brokers' take: OCBC lowers fair value estimate for MIT after paring growth projections
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
OCBC Investment Research on Wednesday (Jan 26) lowered its fair value estimate on Mapletree Industrial Trust (MIT) to S$3.30 from S$3.42. It has a "buy" rating on the counter.
The move comes after the research team pared its terminal growth rate projections by 25 basis points to 1.75 per cent due to keen competition for quality data centre assets and a more uncertain macroeconomic outlook.
The new fair value estimate represents a potential upside of about 26.4 per cent from MIT's closing price of S$2.61 on Wednesday. The counter was up 0.77 per cent or S$0.02.
OCBC said in a report that the real estate investment trust's recently released Q3 2022 results met its expectations. For the nine months ended Dec 31, 2021, net property income rose 34.2 per cent to S$347.8 million, while distribution per unit (DPU) grew to S$0.1031 - accounting for 76.5 per cent of OCBC's FY2022 forecast.
On Tuesday, MIT posted a DPU of S$0.0349 for the third quarter ended Dec 31, 2021, compared with S$0.0328 a year ago. Income distributable to unitholders grew 10.4 per cent to S$89.5 million following a boost in revenue from assets in the US.
Meanwhile, Q3 net property income climbed 24.1 per cent to S$122.7 million as gross revenue rose 31.3 per cent to S$162.4 million. The increase was largely due to revenue contribution from 29 data centres in the US acquired for US$1.32 billion in July 2021, and a data centre in Richmond, Virginia acquired in Q4 FY2021, MIT's manager said.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
MIT has also announced it will resume its distribution reinvestment plan for its Q3 2022 distribution to fund the progressive needs of its development projects.
Doing so should help MIT control its leverage ratio, which has increased to 39.9 per cent from 39.6 per cent, OCBC said in its research note. About 79.9 per cent of MIT's debt has also been fixed or hedged, which should help mitigate a higher interest rate environment, the research team added.
READ MORE: Mapletree Industrial Trust Q3 DPU up 6.4% to 3.49 Singapore cents
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
