Mapletree Industrial Trust: Resilient Growth Amid Macroeconomic Uncertainty

Mapletree Industrial Trust (MIT) closed at \$2.21, reflecting a slight decline of \$0.03. Its third-quarter financial results for FY2024/25 showcase a stable growth trajectory. Distribution per Unit (DPU) increased by 1.5% year-on-year to 3.41 cents. Gross revenue rose by 2.0% to S\$177.3 million, while net property income climbed 2.6% to S\$133.2 million.

The growth was attributed to revenue contributions from its Tokyo acquisition and the completion of phases two and three of data center development in Osaka. Despite higher borrowing costs due to expired interest rate hedges, the distribution to unitholders increased by 2.0% to S\$97.1 million. The average rental rate for its Singapore portfolio climbed to S\$2.28 psf/mth, achieving positive rental reversions across all property segments with a weighted average reversion rate of 9.8%.

Ms. Ler Lily, CEO of MIT, emphasized the trust’s commitment to portfolio resilience through proactive capital management and tenant retention. The addition of a freehold mixed-use facility in Tokyo for JPY14.5 billion enhanced MIT’s geographical diversification, with Singapore, North America, and Japan representing 47.3%, 46.1%, and 6.6% of its assets under management, respectively.

At \$2.21, MIT is capitalized at \$6.3 billion, trading at a price-to-book ratio of 1.3x and a dividend yield of 6.2%. The one-year Bloomberg consensus target price is \$2.62, implying an 18.6% upside. Lim & Tan Securities recommends an “Accumulate” on MIT, citing its stable rental reversions and resilient DPU performance.

BRC Asia: A Regional Expansion Strategy with Challenges

BRC Asia closed at \$2.72, down 1 cent, and is recognized as a leading player in Singapore’s steel reinforcement supply and fabrication sector. The integration of Lee Metal Group into its ecosystem has solidified its market position post-COVID. However, provisions for onerous contracts have impacted its P&L due to steel price volatility. The company has implemented hedging practices to manage this risk, mitigating potential losses and aligning costs with sales value.

As part of its overseas expansion strategy, BRC Asia has established operations in Thailand, targeting Southeast Asia, Hong Kong, and Australia. The group uses metrics such as return on investment, market potential, and operational efficiency to evaluate these opportunities. While its expertise in just-in-time steel reinforcement solutions is transferable, it acknowledges the need to adapt to local market challenges.

BRC Asia currently trades at 9.1x forward PE and 1.6x PB, with a dividend yield of 7.4%. Its market cap stands at S\$746.2 million. Despite the Building and Construction Authority forecasting strong demand for construction projects in Singapore, BRC Asia’s share price has surpassed consensus target price, leading Lim & Tan Securities to recommend a “Hold” on the stock.

Hong Kong’s Fiscal Challenges: Tax Revisions and Economic Recovery

Hong Kong faces significant budget deficits, with the Financial Secretary revising the deficit estimate to nearly HK\$100 billion. The government is considering raising taxes on top income earners or lowering the threshold for the highest tax bracket. Despite these measures, Hong Kong remains competitive with a maximum income tax rate of 16%, compared to Singapore’s 24%.

The city’s financial labor market is showing signs of recovery, with a net addition of 830 licensed financial professionals between June and October 2024. Hong Kong is positioning itself as a global wealth management hub, but challenges such as political uncertainty and talent retention persist.

Share Transactions and Buybacks

Several notable share transactions and buybacks occurred in January 2025:

• Acquisitions: Key transactions include William Liem acquiring 1,403,800 shares of Tuan Sing Holdings and First Pacific Investments acquiring 2,964,400 shares of Indofood Agri Resources.
• Disposals: Koh Yew Choo sold 5,000,000 shares of Advanced Systems Automation.
• Share Buybacks: Companies like Singtel, SCI, and Yangzijiang Financial Holdings executed significant buybacks, with Singtel purchasing 2,500,000 shares at \$3.08 each.

Upcoming Events

January and February 2025 will see several key financial announcements, including:

• Mapletree Logistics Trust (28 January 2025)
• Ascott Trust and CDL REIT (27 January 2025)
• DBS Q4 results (10 February 2025)
• OCBC and City Developments (26 February 2025)