Business Description

Mapletree Pan Asia Commercial Trust (MPACT) is a Singapore-based real estate investment trust (REIT) with a diversified portfolio of commercial properties. The trust invests in income-producing real estate assets such as office and retail properties across key Asian gateway markets, including Singapore, China, Hong Kong, Japan, and South Korea. As of 31 December 2024, MPACT managed 17 commercial properties with total assets under management of S\$15.7 billion. Key properties include VivoCity, Mapletree Business City (MBC), and Festival Walk in Hong Kong.

MPACT’s competitive advantage lies in its diversified geographic footprint, high-quality assets in premium locations, and a strong distribution policy of returning at least 90% of taxable and tax-exempt income to unitholders. However, the trust faces competition from other regional REITs and challenges such as currency fluctuations and market-specific demand pressures.

Revenue Streams and Customer Base

MPACT derives its revenue primarily from rental income, car parking income, and other operating income such as event space rentals and sale of electricity. The trust serves a broad customer base, including retail tenants, multinational corporations, and SMEs. Its diversified asset portfolio helps mitigate risks associated with tenant concentration.

Financial Statement Analysis

Income Statement

For the financial period from 1 April 2024 to 31 December 2024, gross revenue declined by 4.6% year-over-year to S\$685.9 million. Net property income (NPI) decreased by 5.7% to S\$514.0 million, while net profit after tax fell significantly by 41.3% to S\$190.9 million, primarily due to a decline in fair value of investment properties and weaker contributions from overseas assets [[3]-[[6]].

Distribution per unit (DPU) was 6.07 Singapore cents, an 8.3% decline from the previous year, reflecting reduced distributable income [[3], [5]].

Balance Sheet

As of 31 December 2024, total assets stood at S\$15.8 billion, a decrease from S\$16.7 billion as of 31 March 2024. The decline was largely due to the divestment of Mapletree Anson and a reduction in fair value of certain properties. Aggregate leverage improved to 38.2% from 40.5% due to debt repayment using proceeds from the Mapletree Anson divestment [[8]-[[9]].

Cash Flow Statement

MPACT generated S\$457.0 million in net cash from operating activities, a slight decrease year-over-year. Net cash from investing activities totaled S\$741.0 million, boosted by proceeds from the Mapletree Anson divestment. However, net cash used in financing activities amounted to S\$1.19 billion, including debt repayments and distributions to unitholders [[10]-[[11]].

Dividend Information

For the period from 1 October to 31 December 2024, MPACT declared a distribution of 2.00 Singapore cents per unit, comprising 1.41 cents in taxable income, 0.49 cents in tax-exempt income, and 0.10 cents in capital distribution [[31]-[[33]].

Key Strengths

• Diversified Portfolio: High-quality assets spread across key Asian markets reduce geographic risks.
• Improved Leverage: Aggregate leverage decreased to 38.2%, providing financial flexibility.
• Strong Singapore Presence: Singapore remains the cornerstone of stability, contributing significantly to the portfolio [[25]-[[30]].

Risks and Challenges

• Net Profit Decline: A 41.3% drop in net profit poses concerns about long-term profitability [[5]-[[6]].
• Currency Risks: Depreciation of JPY, HKD, and RMB negatively impacted financial performance [[25]-[[26]].
• Weaker Overseas Contributions: Lower occupancy and rental rates in overseas markets add to income challenges [[26]-[[30]].

Special Activities

MPACT completed the divestment of Mapletree Anson on 31 July 2024 for S\$775 million, using proceeds to repay debt and improve its financial position [[2]-[[6]].

Investment Recommendations

If Currently Holding the Stock

Investors should consider holding the stock due to its strong Singapore portfolio and improved leverage. However, monitor closely for improvements in overseas contributions and currency mitigation strategies.

If Not Currently Holding the Stock

Potential investors should adopt a cautious stance and wait for signs of recovery in overseas markets and stabilization of net profit before making an entry.

Disclaimer

This recommendation is based solely on the information provided in the financial report for the period from 1 April 2024 to 31 December 2024. Investors are advised to conduct further research and consult financial advisors before making investment decisions.