Why analysts think Mapletree Logistics Trust is a ‘buy’

Maybank envisions a 20% upside for the Mapletree Logistics Trust stock. Meanwhile, OCBC analysts raised their target price to S$2.17 from S$2.12 previously.

  • Mapletree Logistics Trust (SGX: M44U) shares are up over 2% since the start of the year
  • Earlier this week, the real estate investment trust (REIT) announced a higher distribution per unit (DPU) amount for Q3 2020/2021
  • Maybank and OCBC analysts have reiterated ‘buy’ recommendations on the stock
  • Trade Mapletree Logistics Trust, long or short, with an IG account today

Why analysts are optimistic about Mapletree Logistics Trust

In their latest reports published a day after Mapletree Logistics Trust’s (MLT) third quarter results, analysts say they continue to foresee upsides for the stock, which closed Wednesday (27 January 2021) at S$2 a share.

Maybank’s Head of REITs Research Chua Su Tye kept his MLT rating at ‘buy’ and 12-month target price unchanged at S$2.40. This target price represents an upside of 20% from the stock’s last traded price.

Chua, who named the stock as one of his top S-REIT picks, wrote that MLT ‘delivered a stable 3Q21 as DPU rose 1% YoY due to higher rental income and earlier acquisitions offsetting its divestments and provisions for rental relief’.

Looking ahead, he says that his firm’s earnings forecast remains unchanged on the expectation that MLT’s occupancies will stay resilient amid steady demand growth.

‘MLT’s growing APAC-focused assets under manager (AUM) is well-positioned to capture the sector’s multiple structural growth themes, ie, rising e-commerce demand and supply chain diversification, which have been accelerated by the pandemic,’ he added.

Meanwhile, OCBC analysts maintained a ‘buy’ call on MLT while raising their target price to S$2.17 from S$2.12 previously, citing the REIT’s expected results.

They added that although MLT ‘will not be immune to a weaker macroeconomic backdrop’, they expect it to ‘remain relatively more resilient vis-à-vis its peers’, as they see the company as a ‘key beneficiary of the structural shift towards more robust e-commerce growth trends ahead’.

They also viewed MLT’s recent share price underperformance as a buying opportunity for investors with a medium to longer-term horizon.

MLT increases DPU by 1% in Q3 FY2020/2021

MLT on Monday (25 January) announced that its amount distributable to unitholders for the three months ended 31 December 2020 rose 10.2% year-on-year to S$84.4 million.

This translates to a distribution per unit (DPU) of S$0.02065 on an enlarged unit base following the equity fundraising completed in the same quarter.

The dividend sum also represents a 1% increase from the S$0.02044 paid out during the same quarter a year ago.

Gross revenue for the quarter also increased 15.5% year-on-year to S$139.9 million, mainly due to higher revenue from existing properties, contributions from accretive acquisitions completed in FY2019/2020 and FY2020/2021, as well as contribution from the completed redevelopment project in Shanghai, Ouluo Logistics Park Phase 2.

Looking ahead, MLT said that while the global economy is projected to recover over the course of 2021, the recent resurgence of Covid-19 infections and renewed lockdowns in several countries may hamper the pace of economic recovery.

‘While overall leasing demand for warehouse space in MLT’s markets has stayed relatively resilient to-date, management is working with a few customers to support them. Overall, MLT’s operations remain stable,’ the company noted in its earnings release.

‘The manager continues to keep its focus on proactive asset management and maintaining stable occupancies,’ it added.

How to trade Singapore REITs with IG

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:

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

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