UOB Kay Hian
Date of Report: 25 July 2025

Mapletree Logistics Trust 1QFY26 Results: Navigating Forex Headwinds and Cautious Tenants

Overview: Asia-Focused Logistics REIT Faces Currency and Market Challenges

Mapletree Logistics Trust (MLT), a leading Asia-focused logistics REIT with a diversified portfolio of 180 properties (AUM S\$13.3 billion) across nine key Asia-Pacific markets, faced notable headwinds in 1QFY26. Despite its robust portfolio spanning Australia, China, Hong Kong, India, Japan, Malaysia, Singapore, South Korea, and Vietnam, the trust contended with a challenging macroeconomic landscape marked by trade uncertainties and currency depreciation.

Key Stock Data and Performance Snapshot

• Share Price: S\$1.19
• Target Price: S\$1.33 (11.8% Upside; Previous TP S\$1.43)
• Market Cap: S\$6.04 billion
• Shares Issued: 5,075.1 million
• Major Shareholder: Temasek Holdings (33.5%)
• FY26 NAV/Share: S\$1.25
• FY26 Net Debt/Share: S\$1.04
• 52-week High/Low: S\$1.49/S\$1.03
• FY26 Distribution Yield: 6.1%

1QFY26 Results: Weaker DPU Amid FX and Rental Challenges

MLT reported a DPU of 1.812 Singapore cents for 1QFY26, down 12.4% year-on-year and below expectations. Excluding last year’s capital distributions from divestment gains, the decline would have been a smaller 7.3%. Gross revenue and NPI saw respective declines of 2.4% and 2.1% year-on-year, largely attributed to lower contributions from China and South Korea, currency depreciation, and the absence of income from 12 divested properties.

Geographic and Portfolio Performance: China, South Korea Drag; Singapore, Japan Shine

• China: Suffered a negative rental reversion of -7.5% (Tier 1 cities: -2%, Tier 2: -10%). Revenue dropped 18.4% year-on-year due to continued negative rental reversions for eight consecutive quarters.
• South Korea: Revenue declined 11.2% year-on-year, mainly due to KRW depreciation against SGD.
• Singapore: Positive rental reversion of +5.2%. Occupancy dropped 2ppt to 93.9% due to the new Mapletree Joo Koon Logistics Hub, though excluding this, occupancy would have risen 0.5ppt to 96.4%.
• Japan: Strong rental reversion of +7.2%.
• Australia, India, Vietnam: Maintained full occupancy at 100%.

Portfolio-wide occupancy eased 0.5ppt quarter-on-quarter to 95.7%, impacted by competition from new supply in China and South Korea. Aggregate leverage rose 0.5ppt to 41.2% due to weaker regional currencies affecting portfolio valuations.

Financial Highlights and Key Metrics

• Average Cost of Debt: Stable at 2.7% in 1QFY26, with guidance now at 2.7–2.8% (previously 2.9–3.0%).
• Interest Cover: 2.9x (2026F–2028F).

Market and Tenant Trends: Navigating Trade Tensions and Domestic Demand

• Tenants remain cautious amid uncertainties from shifting trade policies and ongoing trade tensions, which could dampen business and consumer sentiment, affecting warehouse demand, occupancy, and rental rates.
• 85% of MLT’s revenue is from tenants serving domestic consumption; only 15% from export businesses, with higher export exposure in Vietnam (30%), Singapore (25%), Hong Kong (20%), Malaysia (10%), and China (15%).
• Properties in Australia, Japan, and South Korea mainly serve domestic demand.

China: Signs of Stabilization, but Risks Remain

• Net absorption in China surged 89% YoY in 1H25, led by Central & West China and Shanghai.
• Sales of home appliances, electronics, and furniture rose 20% YoY, aided by government stimulus.
• Nationwide rental fell 6.5% in 1H25, with a full-year decline of 9.5% expected for 2025.
• MLT has less exposure to South China, where large new supply and weak cross-border e-commerce weigh on rents.
• Occupancy in China is expected to remain stable at 93–94%.

Strategic Portfolio Actions: Divestments, Redevelopment, and Capital Management

• Completed divestments worth S\$40.8 million year-to-date, including 1 Genting Lane, 8 Tuas View Square, 31 Penjuru Lane (Singapore), and Subang 2 (Malaysia).
• Targeting S\$150 million in divestments for FY26, focused on older assets with limited redevelopment potential.
• Management has adopted a more conservative approach, retaining all divestment gains instead of distributing them, which will dampen future distributions.
• The redevelopment of 5A Joo Koon Circle (formerly 51 Benoi Road) in Singapore is progressing well, with 60% of the 848,000sf NLA pre-committed and 25% under negotiation. The six-storey, Grade A ramp-up logistics facility is expected to achieve 80% occupancy by end-FY26 with a yield of 6.2%.

Earnings Revision, Valuation, and Outlook

• DPU forecasts for FY26 and FY27 have been cut by 7.6% and 7.7% respectively, reflecting currency weakness and the absence of capital distributions from divestment gains.
• Valuation: Target price maintained at S\$1.33 based on Dividend Discount Model (cost of equity 6.75%, terminal growth 1.5%).
• Recommendation: HOLD

Potential share price catalysts include portfolio rejuvenation focused on modern logistics facilities, domestic consumption, e-commerce growth, and positive contributions from redevelopment projects in Singapore and Malaysia.

Key Operating Metrics and Portfolio Breakdown

Portfolio Valuation by Country:

• Hong Kong: 22.5%
• Singapore: 20.5%
• China: 17.9%
• Japan: 14.5%
• South Korea: 8.3%
• Australia: 7.3%
• Malaysia: 5.4%
• Vietnam: 2.9%
• India: 0.7%

Occupancy Levels by Country (as of Jun-25):

• Singapore: 93.9%
• Hong Kong: 98.0%
• China: 93.0%
• Japan: 99.4%
• Australia: 100.0%
• Malaysia: 99.7%
• South Korea: 95.7%
• Vietnam: 100.0%
• India: 100.0%

Top 10 Tenants by Gross Revenue (%): Equinix (3.7), CWT (3.5), Coles Group (2.0), SF Express (1.8), HKTV (1.8), YCH (1.6), Coupang (1.5), Bidvest (1.5), Woolworths (1.4), Cainiao (1.5).

Conclusion: Prudent Strategy Amidst Macro Uncertainties

Mapletree Logistics Trust continues to demonstrate resilience through active asset management and a focus on modernizing its portfolio. While forex and macroeconomic headwinds are pressuring distributions and growth in the short term, the REIT’s strategic divestments, redevelopment pipeline, and exposure to structural demand drivers in Asian logistics bode well for long-term stability. Investors are advised to stay vigilant as the trust navigates this period of transition, with a cautious HOLD recommendation and a focus on sustainable, quality growth.