Mapletree Commercial Trust Q1 earnings: 3 key considerations

Mapletree Commercial Trust’s share price is down nearly 20% this year. What else should investors take note of ahead of the company’s Q1 report on 23 July?

When will Mapletree Commercial Trust’s Q1 2020 financial results be released?

Singapore commercial and retail-focused real estate investment trust (REIT) Mapletree Commercial Trust (MCT) is due to release its financial results for the first quarter of fiscal 2020/2021 on Thursday 23 July 2020 after market close.

Sister companies Mapletree Industrial Trust and Mapletree Logistics Trust are due to announce their Q1 earnings on 21 July and 22 July respectively.

Here are three things for investors to know ahead of MCT’s upcoming report.

1. Mapletree Commercial Trust paid out lower Q4 dividends

MCT had declared a distribution per unit – the REIT equivalent of dividends – of S$0.091 for the fourth quarter of FY2019/2020 ended 31 March 2020, down from S$0.231 in the same quarter a year prior.

The company had stated that the reduced payout was done in the interest of ‘exercising prudence’ amid Covid-19 uncertainties.

Separately, gross revenue was 12.8% higher year-on-year at S$127.3 million for the quarter. MCT attributed this to the first-time contribution by Mapletree Business City II (S$22.7 million), and in spite of rental rebates (S$8.8 million) granted to eligible retail tenants impacted by the Covid-19.

Across the full year, gross revenue was 8.8% higher at S$482.8 million for fiscal 2019/2020, compared to FY2018/2019.

Consequently, profit before tax and fair value change in investment properties came in at S$263.5 million for the full financial year – 7.3% higher year-on-year.

Amount available for distribution of S$243.2 million for year, however, was 7.9% lower compared to S$264.0 million for FY2018/2019, after taking into account the effect of capital allowance claims, non-tax deductible items and other adjustments.

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2. Moody’s downgraded Mapletree Commercial Trust’s ratings to ‘negative’

A second point worth noting for investors and fund managers is that Moody’s Investors Service lowered the outlook on all MCT credit ratings to ‘negative’ from ‘stable’ in May.

The ratings had been downgraded on the expectation that MCT’s debt-related metrics would weaken, following ramped up Covid-19 social distancing and lockdown measures in Singapore during the months of April and May 2020.

Moody’s analysts had said this will lead to weaker consumer sentiment, which will in turn curb retail spending at VivoCity – MCT’s top income-generating asset at 32.7% of Q4 2019/2020’s overall net property income.

‘Furthermore, MCT's cash flows could be adversely impacted by Singapore's legislation that allows tenants to defer rent payments for an initial six months. The outlook for demand for office space has also weakened given the recession in the global economy and also as the work from home threatens to become the new normal for many companies,’ they added.

Nevertheless, Moody’s had also affirmed a (P)Baa1 rating for Mapletree Commercial Trust Treasury Company’s (MCTTC) Multicurrency Medium Term Note Programme, as well as Baa1 ratings on the senior unsecured notes drawn down from the programme under MCTTC.

Read more: 5 Singapore REIT stocks to consider in 2020 - Far East Hospitality, Keppel REIT, A-REIT, CapitaLand Mall and Frasers Centrepoint

3. Mapletree Commercial Trust could see 4.6% share price upside

Meanwhile, MCT’s share price is down nearly 20% year-to-date. Still, stocks have recovered over 30% since a three-year low recorded in early April this year, during the height of the Covid-19 pandemic in Singapore.

IG’s market analysis show that ‘sells’ form 57% of all trades on the MCT counter so far in the month of July. Additionally, 64% of IG client accounts with open positions in this market expect the price to rise, with the remaining 36% anticipating a share price drop.

In terms of broker ratings, the MCT stock has an average recommendation of ‘hold’ from 13 analysts and an 18-month share price target of S$2.012, according to Refinitiv data.

This price estimate represents an upside of 4.6% from the last traded price of S$1.92 (as at 16:15 SGT on Monday 20 July 2020).

How to trade Singapore REITs with IG

Are you feeling bullish or bearish on stocks of Mapletree Commercial Trust and other Singapore REITs? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  • Create a live or demo IG Trading Account, or log in to your existing account
  • Enter <Mapletree Commercial Trust> in the search bar and select the instrument
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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