Mapletree Logistics Trust Earnings: New Acquisitions Offset Currency and Interest Rate Headwinds

Mapletree Logistics Trust’s M44U Japan and South Korea acquisitions helped the trust to reverse three consecutive quarters of revenue and net property income decline, and to post a positive quarter-on-quarter growth of 1.8% and 2.5%, respectively, in first-quarter fiscal 2024 (ending March). Distribution per unit, or DPU, was also up 0.1% quarter on quarter to SGD 0.02271 per unit after the trust topped up its distribution from a write back on a previous capital gain tax provision. As the results were in line with our expectations, we retain our fair value estimate of SGD 1.66. We think the trust is fairly valued currently as it trades at a fiscal 2024 dividend yield of 5.2% and encourage investors to wait for a better entry point. Looking ahead, we expect contributions from its newly acquired Japan, South Korea, and Australia assets to drive near-term growth and offset some of its currency and interest rate headwinds. However, we also expect the trust’s China portfolio, especially in tier 2 cities, to drag on its leasing performance, given weakness in the overall China economy.

The trust resumed its dividend reinvestment plan that allows unitholders to take units instead of cash dividends. We are positive on this move as it is a cost-effective method for unitholders to increase their stake in the trust without additional transaction cost. The plan will also help the trust to strengthen its working capital reserves and help finance the progressive funding needs of its redevelopment projects. Management does not expect the dilution effect of the plan to be significant as the sponsor, Mapletree Investments (which holds 31.5% of the trust’s units), will receive cash dividends.