Brokers’ take: DBS calls MPACT’s valuations attractive, reinstates coverage with ‘buy’

DBS Group Research on Wednesday (Sep 14) called Mapletree Pan Asia Commercial Trust (MPACT) an “opportunity not to be missed” as it expects the real estate investment trust (Reit) to be a beneficiary of further recovery when Hong Kong and China reopen.

The Asia-focused Reit is trading at a yield above 5 per cent, offering an attractive yield spread as the third-largest Singapore-listed Reit (S-Reit), DBS said in a report.

It has reinstated its coverage on the counter with a “buy” call and target price of S$2.30, implying a potential upside of 20.4 per cent on MPACT’s last trading price of S$1.91 as at 4.08 pm on Wednesday. Its units were trading 1 per cent or S$0.02 lower at the time. 

MPACT is currently trading at 1 time its net asset value, slightly above the mean of the weighted average historical trading range of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT).

MCT and MNACT merged to form MPACT in August by way of a trust scheme. MNACT was later delisted from the Singapore Exchange.

The potential divestment of non-core assets in Japan and China could allow the Reit to review and optimise its portfolio. This means MPACT will be able to focus on good-quality assets in its core market – Singapore, raising its net property income contributions in the process.

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Its retail assets VivoCity and Festival Walk will likely benefit from further recovery when Hong Kong and China reopen further. The Reit could even deliver a 2-year distribution per unit compound annual growth rate of 7 per cent, assuming a full recovery for both assets and other assets remain stable.