Bond Articles


Mapletree Logistics Trust – Unfazed By The Pandemic

Timothy Ang  |   07 Sep 2020  |    587 views

  • Revenues rose 10.5% YoY to S$132.4mn, EBIT grew 17.6% YoY to S$96.3mn on higher margins of 72.7%, up 4.4%.
  • Gearing (D/A) including perpetuals remained stable, up 0.3% to 42.9% despite net debt issuance. Borrowing cost rose 6.5% QoQ on higher borrowings for acquisitions.
  • Occupancies remained healthy at 97.2% from 98.0% previous quarter, and rental reversions was positive 1.9%, vs 2.0% previous quarter.
  • We are Overweight on the MLTSP 4.18% Perp Corp (SGD) with a yield to call of 3.15% and yield to worst of 3.08%, and Neutral on the MLTSP 3.65% Perp Corp (SGD) with YTC of 3.31% and YTW of 2.76%.

The Positives

+ Revenue rose 10.5% YoY to S$132.4mn on existing portfolio and new acquisitions, offset by rental rebates to eligible COVID-19 impacted tenants and divested investment properties. EBIT grew 17.6% to S$96.3mn on higher revenues and EBIT margins of 72.7%, up 4.4%. Average rental reversion was positive 1.9% for the quarter, mainly due to properties in China, Hong Kong SAR, Malaysia and Vietnam. Leasing demand for warehouse space remain resilient amidst COVID-19 and 98.7% of MLT’s tenants in terms of total revenue have resumed operations, except of 1.3% mainly from Singapore. The group has hedged 78% of revenues to SGD.

+ Portfolio occupancy remained healthy ay 97.2%. WALE stood at 4.3 years and is well-staggered with 15.6% and 24.2% of leases by NLA expiring in the next 2 years respectively.

+ Adequate aggregate leverage of 39.6%. Our stress tests show investment property values can fall by 22% or borrowings increased by S$1bn or 30% before the MAS gearing limit is breached. Also, MLT has sufficient committed credit facilities of S$530mn to pay off all short-term debt.

Debt maturity profile is well staggered with 10% maturing in the next 2 years and an average debt duration of 4 years. In the quarter, MLT refinanced S$127mn equivalent of HKD and AUD loans with existing committed credit facilities. As a result, short-term debt declined to S$129mn QoQ from S$202mn. 80% of total debt has been hedged to fixed rates, with the weighted average annualised interest rate at 2.3%.

The Negatives

– Borrowing costs increased 6.5% from net debt issuance of S$86mn in the quarter for acquisitions. Interest cover ratio including perpetual bond payments remained healthy at 3.6x.

Outlook

MLT’s performance remained resilient despite COVID-19. With a debt headroom of S$1bn based on the MAS gearing limit of 50%, MLT has room for more growth through acquisitions. A proposed acquisition of a Grade A logistics facility in Brisbane Australia for S$20.2mn is expected to complete and begin contributions in 3Q21. MLT is rated investment grade Baa2 with a stable outlook by Moody’s.

Bond Recommendation

On the Mapletree curve, we are Overweight on the MLTSP 4.18% Perp Corp (SGD) with a yield to call of 3.15% and yield to worst of 3.08%. and Neutral on the MLTSP 3.65% Perp Corp (SGD) with YTC of 3.31% and YTW of 2.76%.

 

 

Related Articles

Singapore’s First Infrastructure Bond Expected in October

The first Significant Infrastructure Government Loan Act (SINGA) bond will be issued soon for Singapore's development expenditure spending.

Phillip Bonds  |   16 Sep 2021

Starhill Global REIT: Stable Investment Grade Bonds

Starhill Global REIT is positioned for retail recovery as Singapore reopens, with a long WALE of 5 years and high occupancy of 99%.

Phillip Bonds  |   03 Sep 2021

What is a Commercial Paper: Fixed Income

Commercial papers are short-term debt instruments that typically pay higher yields than government bonds. Here's what makes them attractive.

Phillip Bonds  |   10 Aug 2021

Disclaimers


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Enquiry


Have an enquiry? Get in touch with us at (+65) 6212 1818 or message us below!
Not yet an account holder? Open an account online here