Is Mapletree Logistics Trust Worth Investing In Now?

In December 2016, I bought units of Mapletree Logistics Trust (MLT) and have treated them as my own ‘Christmas Present’. At that time, MLT was trading at S$ 1.00 an unit, a 20% fall from S$ 1.24 an unit in April 2015.

Source: Google Finance

I remembered, prior to my purchase, I did my due diligence on MLT and found myself clueless as to why its stock price fell 20% in 20 months when it is a REIT that delivers consistent growth in sales, profits, and distribution per unit (DPU) since its listing and fortunately, until today as I am writing presently. From the graph above, I had achieved a capital gain of 21% since December 2016. Not a bad Christmas Present, if you asked me.

Like always, I would always look forward to MLT’s quarterly announcements as I want to be updated with the status of its portfolio and more importantly, find out how much dividends I would receive for the current quarter. For Q2 2019, I found quite a fair bit of exciting new developments for MLT, thus, would like to summarized them for you in this article.

Here are 5 things to know about MLT before you invest.

#1: MLT’s Current Portfolio

Key Statistics Q2 2019:

No. of Properties – 139

Net Lettable Area (NLA) – 4.4 million sq. m.

Tenant Base – 619

MLT derives income from a portfolio of 139 properties where most of them are located in Singapore, Japan, Hong Kong, and Mainland China. On 30 September 2018, MLT has reported a 97.6% in occupancy rate for its portfolio where these properties are leased to 619 tenants.

 

Source: Q2 2019 Financial Results of MLT

#2: Financial Results

Key Statistics Q2 2019:

Gross Revenue – S$ 106.6 million

Distributable Income – S$ 63.9 million

Distribution per Unit (DPU) – 1.958 cents

As mentioned earlier, MLT has delivered strong sets of financial results since its listing. For Q2 2019, MLT has reported to make S$ 106.6 million in revenue and from which, it earned S$ 63.9 million in distributable income and declared 1.96 cents in DPU. They are the best financial results reported over the last 5 years.


Source: Quarterly Results of MLT

#3: Balance Sheet Strength

Key Statistics Q2 2019:

Total Debt – S$ 3.0 Billion

Weighted Average Interest Rate – 2.5% per annum

Aggregate Leverage Ratio – 38.1%

As at 30 September 2018, MLT has reported to have S$ 3.0 billion in total debt, thus, its aggregate leverage ratio is 38.1%. It is an increase from S$ 2.5 billion in total debt and aggregate leverage ratio of 36.4% on 30 June 2018. The increase of close to S$ 0.5 billion in debt is due to borrowings raised to fund its purchase of 5 ramp-up properties in Singapore during the period. Presently, MLT is given a Baa2 with stable outlook credit rating by Moody’s.

Source: Q2 2019 Financial Results of MLT

#4: Growth Driver 1: Recent Acquisitions

MLT has been aggressive in expanding its portfolio. Here, I’ll list down its latest acquisitions made over the last 12 months:

A Warehouse in Binh Duong Province, Vietnam

On 1 November 2018, MLT has acquired one warehouse in Vietnam-Singapore Industrial Park 1, Binh Duong, Vietnam for S$ 43.0 million. This property would be leased back to Unilever Vietnam for 10 years with annual rent escalations.

Coles Distribution Centre, Australia

On 26 October 2018, MLT has acquired the Coles Distribution Centre, Brisbane, Australia for S$ 102.2 million. The property is leased to Coles Supermarkets till January 2023.

5 Ramp-Up Logistics Properties, Singapore

On 28 September 2018, MLT had completed the acquisition of its five Ramp-Up Logistics Properties in Singapore for S$ 730 million. These properties are leased back to their vendor, CWT Ltd and its subsidiaries where their lease terms are 5 – 10 years with built-in rental escalation of 1.5% per annum.

50% stake in 11 Logistics Properties in China

On 6 June 2018, MLT had completed the acquisition of 50% stake in 11 logistics properties located in China for S$ 593.1 million. These properties are leased to e-commerce companies such as JD.com, Inc and Cainiao and companies related to e-commerce such as Best Logistics Technology (China) Co. Ltd, Sinotrans Ltd, and China Post Group Construction. Combined, the 5 tenants would account as much as 53.8% of gross revenue for these 11 logistics properties.

38% stake in Shatin No.3, Hong Kong

On 29 January 2018, MLT has completed the acquisition of 38% stake in Shatin No.3 for S$ 103.7 million. Subsequently, MLT owns 100% stake of the property and thus, enabling it to have full control and flexibility to enhance value of the property through refurbishment and asset repositioning strategies in the near future.

Mapletree Logistics Hub Tsing Yi, Hong Kong

On 12 October 2017, MLT has completed its acquisition of Mapletree Logistics Hub Tsing Yi for S$ 834.8 million. This property is fully occupied with a total of 12 tenants such as Ever Gain, adidas, Angliss, HKTV, and Aramex.

#5: Growth Driver 2: Redevelopment Project

MLT is redeveloping Ouluo Logistics Centre in China into 4 blocks of two-storey modern ramp-up logistics facility. It is estimated to cost S$ 70 million. As I write today, Phase 1 of the project has been completed in September 2018. MLT has just started Phase 2 of the project and targets to complete it by Q4 2020. Upon completion, MLT would increase Ouluo Logistics Centre’s gross floor area (GFA) by 2.4 times to 80,700 sq. m.

#6: Growth Driver 3: Rights of First Refusal (ROFR)

Presently, MLT was granted ROFR from its sponsor, Mapletree Investments Pte Ltd, 44 logistics development projects across Asia. Out of which, 38 of them are located in China. The rest are located in Malaysia, Vietnam, and Japan. As such, MLT has a pipeline of properties to be acquired in the future.

#7: Valuation

Key Statistics:

Current Dividend Yields – 6.41%

For the last 12 months, MLT has declared 7.759 cents in DPU. Therefore, MLT’s gross dividend yield is 6.41% based on its current stock price of S$ 1.21, a little short of its 6-Year Dividend Yield Average of 6.50%.

As at 30 September 2018, MLT has reported net assets per share of S$ 1.13. So, MLT’s current P/B Ratio is 1.07, below its 6-Year Current P/B Ratio of 1.128.

VIA’s Verdict

So, should I invest in MLT at S$ 1.21 an unit?

Like always, my questions to you are:

  1. Do you like MLT’s growth prospects for the future?  
  2. Is a gross dividend yield of 6.41% attractive to you?  
  3. Would you buy more MLT’s units if its stock price drops in the future?

Ian Tai

Ian Tai is the founder of Bursaking.com.my, a platform that empowers retail investors to build wealth through ownership of fundamentally solid stocks. It is an essential tool that sifts out stocks that grow profits consistently from a database of over 900+ stocks listed mainly in Malaysia. As a Malaysian with close family ties in Singapore, Ian publishes a series of newsletters on how anyone can invest profitability in both countries.

One thought on “Is Mapletree Logistics Trust Worth Investing In Now?

  • November 17, 2018 at 4:40 pm
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    Excellent and thank you for this.

    Reply

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