MPACT Q4FY25 Results (MACT.SI): Singapore Portfolio Shines Amidst Headwinds – BUY Rating Reiterated

OCBC Investment Research Private Limited 25 April 2025
Mapletree Pan Asia Commercial Trust (MPACT): Singapore Strength Offsets Overseas Challenges, BUY Rating Maintained

Investment Snapshot: MPACT’s Diversified Portfolio Faces Mixed Conditions

Mapletree Pan Asia Commercial Trust (MPACT), trading under the ticker MACT.SI, presents investors with a unique exposure across retail, office, and business park sectors in key Asian markets. With a closing price of SGD 1.22 on April 25, 2025, and a fair value estimate of SGD 1.45, the trust maintains a BUY rating.
Supported by strong parentage and management, MPACT’s portfolio includes prominent Singapore assets like VivoCity and Mapletree Business City (MBC). However, challenges persist in its overseas holdings, particularly in Greater China. While negative rental reversions at Hong Kong’s Festival Walk mall are showing signs of narrowing, concerns remain about structural issues, including retail sales leakage to Shenzhen.
On a positive note, the divestment of Mapletree Anson has significantly improved MPACT’s balance sheet, reducing its aggregate leverage ratio from 40.5% (as of June 30, 2024) to 37.7% (as of March 31, 2025).

Security Information

• Ticker: MACT.SI
• Market Cap (SGD b): 6.4
• Daily Turnover (SGD m): 14.8
• Free Float: 43%
• Shares Outstanding (m): 5,268
• Top Shareholder: Temasek Holdings Pte. Ltd. (57.0%)

Q4 FY25 Financial Performance: DPU Declines Amid Weaker Overseas Contributions

MPACT’s results for the fourth quarter of the financial year ending March 2025 (4QFY25) fell short of expectations.

• Distribution Per Unit (DPU): Fell 14.8% year-on-year (YoY) to 1.95 Singapore cents.
• Gross Revenue: Declined 6.8% YoY to SGD 222.9 million.
• Net Property Income (NPI): Dropped 7.4% YoY to SGD 169.5 million.

These declines were attributed to weaker performance from overseas properties and the lack of income following the divestment of Mapletree Anson. Despite a 9.4% decrease in net finance costs to SGD 51.1 million, resulting from debt repayment using divestment proceeds, the DPU still saw a significant dip.
For the full financial year FY25, MPACT’s DPU was 8.02 Singapore cents, a 10.0% decrease from the previous year and representing 97.6% of the forecasted amount.

Financial Summary & Forecast

Key Ratios

Portfolio Performance: Occupancy and Rental Reversions Show Mixed Results

Occupancy Trends

MPACT’s overall portfolio committed occupancy saw a slight dip of 0.4 percentage points quarter-on-quarter (QoQ), settling at 89.6% as of March 31, 2025.

• Singapore: VivoCity and MBC experienced minor occupancy declines. However, Other Singapore Properties improved to a high occupancy rate of 99.5%. Management is hopeful about improving MBC’s occupancy as tenants may seek cost savings through decentralization.
• South Korea: The Pinnacle Gangnam (TPG) saw a significant occupancy boost, jumping from 89.7% to 99.9% QoQ.
• China: Properties showed improvement, with occupancy rising 1.8 ppt QoQ to 86.1%.
• Hong Kong: Festival Walk’s occupancy decreased slightly by 0.3 ppt QoQ to 96.8%.
• Japan: Properties experienced a larger drop of 2.8 ppt QoQ to 79.8%.

Management notes a general slowdown in decision-making among tenants, with some potentially opting for shorter leases. Caution was expressed regarding the shipping and trade sectors due to trade uncertainties.

Rental Reversions

Overall portfolio rental reversions for FY25 were positive at +3.6%. However, performance varied significantly by asset and region:

• Positive Reversions: VivoCity (+16.8%), MBC (+2.2%), Other SG Properties (+7.4%), TPG South Korea (+26.9%).
• Negative Reversions: Festival Walk Hong Kong (-6.9%), China properties (-9.3%), Japan properties (-7.2%).

Tenant sales trends also varied, with VivoCity’s sales falling 2.1% YoY in FY25, while Festival Walk’s sales dropped 8.4% YoY over the same period.

Historical Portfolio Occupancy and DPU

Portfolio Occupancy Trend:

• FY2019: 98.1%
• FY2020: 97.1%
• FY2021: 93.5%
• FY2022: 94.3%
• FY2023: 95.4%
• FY2024: 96.1%
• FY2025: 89.6%

Distribution Per Unit (S cents) Trend:

• FY2019: 9.14
• FY2020: 8.00
• FY2021: 9.49
• FY2022: 9.53
• FY2023: 9.61
• FY2024: 8.91
• FY2025: 8.02

Balance Sheet and Financial Position

MPACT’s financial position strengthened, with the aggregate leverage ratio decreasing by 0.5 ppt QoQ to 37.7%. A significant portion of its debt, 79.9%, is hedged against interest rate fluctuations. Healthy valuation uplifts in the Singapore portfolio helped mitigate impairments in the China and Hong Kong assets.
The weighted average all-in cost of debt slightly decreased to 3.51%, and management anticipates it will remain around the mid-3% level.
Reflecting heightened market volatility and macroeconomic uncertainties, especially concerning Greater China, the FY26 DPU forecast has been lowered by 3.4%. The cost of equity assumption used in valuation has been increased from 7.2% to 7.4%. Consequently, the fair value estimate for MPACT has been adjusted downwards from SGD 1.48 to SGD 1.45.

ESG Developments

MPACT received an upgraded ESG rating in December 2024. This improvement was primarily driven by enhancements in corporate governance practices, aligning them with global peers. Key governance strengths include a board that remains majority independent and is led by an independent chairperson.
In sustainability, MPACT surpasses industry peers in green building certifications and utilizes green lease agreements to improve the environmental profile of its portfolio. The trust achieved a four-star rating with 86 points in the 2024 GRESB Real Estate Assessment.

Potential Catalysts and Investment Risks

Potential Catalysts

• Higher-than-anticipated valuation uplifts for properties.
• Acquisitions that enhance DPU.
• Stronger-than-expected recovery in footfall and tenant sales at key malls like VivoCity and Festival Walk.

Investment Risks

• A slowdown in macroeconomic conditions could negatively impact consumer and business sentiment.
• Acquisitions might not deliver the expected results.
• Failure to renew leases with key tenants could affect income.

Valuation Analysis and Peer Comparison

The table below compares MPACT’s valuation metrics against its peers for the estimated financial years 2026 (FY26E) and 2027 (FY27E).

Company Overview (as of 31 Mar 2025)

Mapletree Pan Asia Commercial Trust (MPACT) is positioned as a key proxy for investors seeking exposure to gateway markets across Asia. Originally listed as Mapletree Commercial Trust in April 2011, it was rebranded following its merger with Mapletree North Asia Commercial Trust in August 2022.
MPACT’s primary investment strategy involves long-term investment, directly or indirectly, in a diverse portfolio of income-generating real estate used mainly for office and/or retail purposes, along with real estate-related assets. Its focus is on key Asian gateway markets, including Singapore, China, Hong Kong, Japan, and South Korea.
The portfolio consists of 17 commercial properties spanning these five markets: four in Singapore, one in Hong Kong, two in China, nine in Japan, and one in South Korea. These properties boast a total net lettable area (NLA) of 11.2 million square feet and were independently valued at SGD 16.0 billion as of March 31, 2025.

FY25 Revenue and NPI Breakdown by Geography

Gross Revenue Breakdown:

• Singapore: 61.1%
• Hong Kong: 22.0%
• China: 9.1%
• Japan: 7.8%
• Korea: 0.0%

Net Property Income Breakdown:

• Singapore: 61.8%
• Hong Kong: 21.8%
• China: 10.0%
• Japan: 6.5%
• Korea: 0.0%

Detailed Company Financials

Income Statement Summary

Profitability Ratios

Credit Ratios

Analyst Declaration and Disclaimer

The analyst(s) responsible for this report certify that the opinions expressed accurately reflect their views on the securities mentioned and that reasonable care was taken to maintain independence and objectivity. The analyst(s) and/or their connected persons hold financial interests in the listed entity. Compensation received by the analyst(s) is not directly or indirectly related to the specific recommendations or views in this report. The analyst(s) do not serve on the board or in trustee positions of the listed entity, and no compensation or benefits were provided by the listed entity or third parties in connection with this report.

This report is for information and general circulation only and should not be construed as an offer or solicitation to buy or sell any securities or participate in any trading strategy. Information is compiled from sources believed reliable, but accuracy is not guaranteed, and independent verification is advised. Opinions and estimates are subject to change without notice. Investment objectives, financial situation, or specific needs of recipients have not been considered. Seek advice from a financial adviser regarding suitability before investing. OCBC Bank, Bank of Singapore Limited, OCBC Investment Research Private Limited (OIR), OCBC Securities Private Limited, and related entities may have interests in the mentioned investment products or issuers, potentially creating conflicts of interest. Forward-looking statements involve risks, and actual results may differ. Past performance is not indicative of future results.

Ratings guide: OIR’s fundamental ratings (Buy, Hold, Sell) are medium-term (12-month horizon). For REITs/Business Trusts, BUY indicates >10% expected total return (including dividends), HOLD is +10% to -5%, SELL is <-5%. For companies with market cap ≤ S\$150m, BUY is >30%, HOLD is +/-30%, SELL is <-30%.