Mapletree Logistics Trust (MLT SP): Reversion Resilience & FY25 Results – CGS International Analysis

CGS International

April 24, 2025

Mapletree Logistics Trust: Portfolio Diversity Drives Reversion Resilience

Mapletree Logistics Trust (MLT) demonstrates resilience through its diversified portfolio, achieving stable performance amidst market challenges. This analysis delves into MLT’s recent financial results, portfolio metrics, and strategic initiatives, providing insights for investors and stakeholders.

FY25 Performance Overview

• DPU Performance: MLT’s 4QFY25 and FY3/25 distribution per unit (DPU) of 1.955 and 8.053 Singapore cents, respectively, aligned with forecasts, achieving 24.4% and 100.6% of FY25F expectations [[1]].
• Portfolio Take-Up: The portfolio achieved a 96.2% take-up rate in 4QFY25, with a +5.1% reversion [[1]].

Detailed Results Analysis

MLT reported a slight year-over-year (YoY) revenue decrease of 0.8% in 4QFY25, totaling S\$179.6 million. Net property income (NPI) also experienced a 1.6% YoY decline, falling to S\$152.8 million. This was attributed to reduced contributions from China, the absence of income from divested properties, and unfavorable foreign exchange rates. These factors were partially offset by increased contributions from Singapore, Australia, and Hong Kong, China [[1]].

Distribution income for the quarter amounted to S\$99.1 million, translating to a DPU of 1.955 Singapore cents, a 10.3% YoY decrease. This decline reflects higher borrowing costs and reduced distribution of divestment gains. Year-end valuations revealed net fair value losses in properties located in China, South Korea, and Singapore, balanced by gains in other markets [[1]].

Portfolio Metrics and Leasing Dynamics

• Occupancy Rates: Portfolio occupancy slightly decreased by 0.1% quarter-over-quarter (QoQ) in 4QFY25, settling at 96.2%. This was influenced by lower take-up rates in Singapore, Japan, South Korea, Vietnam, and Malaysia [[1]].
• Redevelopment Progress: The redevelopment of 5A Joo Koon Circle has secured a pre-commitment rate of 46%, up from 11% in 3QFY25, with an additional 30% under active negotiation. The project is on track for completion in May 2025 [[1]].
• Rental Reversion: MLT achieved an overall rental reversion of +5.1% in 4QFY25 (+6.9% excluding China). Positive reversions ranged from 1.3% in Hong Kong SAR to 15.7% in Japan. China experienced negative rental reversion of -9.4%, although the rate of decline slowed QoQ [[1]].
• Lease Expiry Profile: Approximately 32.3% and 21.9% of leases are due for renewal in FY26F and FY27F, respectively. A significant 50% of FY26F lease expirations are in China, potentially impacting overall portfolio rental reversion due to prevailing negative trends [[1]].

Capital Management and Financial Stability

• Gearing and Interest Costs: MLT’s gearing ratio increased to 40.7% by the end of 4QFY25. Interest costs remained stable QoQ at 2.7%. Approximately 81% of debt is hedged into fixed rates, and 75% of distributable income is hedged into Singapore dollars (S\$) for the next 12 months [[1]].
• Strategic Financial Flexibility: MLT intends to retain divestment gains to enhance financial flexibility, given current market uncertainties. Approximately 85% of its revenue comes from tenants serving domestic consumption, providing portfolio stability, with only 15% engaged in export business [[1]].

Investment Recommendation

The FY26-27F DPU estimates have been adjusted downward by 1.09-1.98% to reflect a more conservative growth outlook. Consequently, the DDM-based target price (TP) has been lowered to S\$1.63, with a cost of equity of 7.83% [[1]].

The “Add” rating is maintained, supported by an anticipated FY26F DPU yield of 6.4%, which adequately factors in the expected slower growth. Potential catalysts for a re-rating include sustained leasing momentum with positive rental renewals and increased asset recycling activities. Downside risks include a softening macroeconomic outlook, impacting rental growth and portfolio values, and adverse rental reversion trends [[1]].

Key Figures and Tables

Figure 1: Results Comparison [[2]]

Figure 2: Key Earnings Revisions [[2]]

Peer Comparison

Figure 3: SREIT Peer Comparison [[2]]

ESG Analysis

MLT’s ESG performance, as evaluated by LSEG, is noteworthy. The overall ESG score is B, segmented into Environmental (B+), Social (B), and Governance (B+). MLT excels in ESG Controversies, achieving an A+ rating [[3]].

• Green Roadmap: MLT introduced a green roadmap in its FY3/24 annual report, outlining 2030 targets for green building certification and solar energy generation. The roadmap supports achieving carbon neutrality for Scope 1 and 2 emissions by 2030, with a long-term goal of net-zero emissions by 2050 [[3]].
• Sustainability Targets: Key targets include green certification for over 80% of its portfolio and a 20% reduction in energy intensity in Singapore and Hong Kong SAR from the FY3/19 baseline by 2030. Additionally, MLT aims to expand solar energy generating capacity to 100 MWp by 2030 [[3]].
• Alignment with Sponsor: MLT’s sustainability approach aligns with Mapletree Investments, focusing on transitioning to a low-carbon economy, ensuring employee and stakeholder health and safety, promoting workforce diversity and inclusion, supporting operating communities, and upholding high ethical standards [[3]].

Areas for Improvement

MLT’s environmental innovation (D+), community (D-), and shareholder (C+) ratings are areas needing enhancement. Improving the environmental pillar could elevate overall ESG scores. The report has not applied any premium/discount for ESG in our fundamental valuations [[3]].

Comparative ESG Ranking

LSEG ranks MLT 20th among 104 Singaporean companies and 6th out of 26 real estate companies/REITs in Singapore. Notable ESG initiatives for FY3/25 include increasing green certified space to 45% of the portfolio by gross floor area (GFA) as of September 2024. Self-funded solar generating capacity increased to 47.6 MWp, with total capacity reaching 69.1 MWp by December 2024. Over 1,600 indigenous trees were added across the portfolio in FY3/24. Furthermore, portfolio energy intensity decreased by 2%, and water intensity decreased by 20% from the FY23 baseline [[3]].

As of December 2024, total green and sustainability-linked loans amounted to S\$1.2 billion, approximately 21.6% of total debt facilities. The report finds that MLT fares well in its E, S, G pillars with few controversies and could be valued at a premium by some investors [[3]].

Detailed Financials

Profit & Loss (S\$m) [[4]]

Cash Flow (S\$m) [[4]]

Balance Sheet (S\$m) [[5]]

(S\$m)	Mar-24A	Mar-25A	Mar-26F	Mar-27F	Mar-28F
Total Investments	13,140	13,245	13,229	13,264	13,350
Intangible Assets	0	0	0	0	0
Other Long-term Assets	193	219	219	219	219
Total Non-current Assets	13,333	13,464	13,448	13,483	13,569
Total Cash And Equivalents	305	299	258	209	159
Inventories	0	0	0	0	0
Trade Debtors	41	39	39	39	39
Other Current Assets	133	91	91	91	91
Total Current Assets	479	429	388	339	288
Trade Creditors	314	324	324	324	324
Short-term Debt	275	374	374	374	374
Other Current Liabilities	32	43	43	43	43
Total Current Liabilities	621	740	740	740	740
Long-term Borrowings	5,035	5,208	5,215	5,265	5,365
Other Long-term Liabilities	672	698	698	698	698
Total Non-current Liabilities	5,707	5,906	5,913	5,963	6,063
Shareholders’ Equity	6,885	6,6 Previous Post Singapore CPI Moderates; MAS to Remain Dovish – Economic Analysis & Forecasts Next Post Mapletree Logistics Trust (MLT SP): Navigating Trade Tensions – BUY Rating Related Posts Market Updates Sunny Optical Technology Sees Strong Growth with High-End Product Focus in 4Q24 minichart October 15, 2024 Date and Broker Information Date of Report: October 14, 2024 Broker: CGS International Securities Overview of Sunny Optical Technology Sunny Optical Technology, a major player in the optical and optoelectronic product manufacturing sector, is... Market Updates China Merchants Bank: Positioned for Growth as Economic Policies Enhance Financial Sector Opportunities minichart October 2, 2024 Date of Report October 1, 2024 Broker Name CGS International Securities Company Overview China Merchants Bank is a leading financial institution in the banking sector, offering a range of financial services, including corporate and... Market UpdatesSingapore SGX stocks DBS Group: Southeast Asia’s Banking Giant Poised for Higher ROE and Dividend Yields minichart February 11, 2025 DBS Group: Comprehensive Financial Analysis and Investment Outlook DBS Group: Comprehensive Financial Analysis and Investment Outlook Prepared by Maybank Research | February 10, 2025 Introduction DBS Group, Southeast Asia’s largest bank by assets and...