Mapletree Pan Asia Commercial Trust (MPACT) Q1 FY25/26 Analysis: Net Profit Decline of 1.1%

Report Overview

This report analyzes the unaudited condensed interim financial statements and distribution announcement for Mapletree Pan Asia Commercial Trust (MPACT) for the first quarter financial period from 1 April 2025 to 30 June 2025. The report is dated 30 July 2025. [[32]]

Business Description

MPACT is a real estate investment trust (REIT) focused on key gateway markets in Asia. [[2]] It invests in income-producing real estate primarily for office and/or retail purposes. [[2]]

Core Business Operations:

• Invests directly or indirectly in a diversified portfolio of real estate. [[2]]
• Focuses on office and/or retail properties. [[2]]

Business Segments:

The company’s performance is assessed based on geographical markets and property groups within its portfolio. [[22]] These markets include Singapore, Hong Kong, China, Japan, and South Korea. [[2]]

Geographic Footprint:

MPACT has properties in Singapore, China, Hong Kong, Japan, and South Korea. [[2]] As of 30 June 2025, MPACT’s portfolio comprised 17 commercial properties across these key gateway markets of Asia. [[2]]

Key Properties:

• Singapore: VivoCity, Mapletree Business City (MBC), mTower, Bank of America HarbourFront (BOAHF). [[2]]
• Hong Kong: Festival Walk. [[2]]
• China: Gateway Plaza (Beijing), Sandhill Plaza (Shanghai). [[2]]
• Japan: Nine freehold office buildings across Tokyo, Chiba City, and Yokohama City. [[2]]
• South Korea: The Pinnacle Gangnam (TPG). [[2]]

Industry Position and Competitive Advantage:

The report does not explicitly detail MPACT’s specific market share or direct competitors. However, it positions MPACT as a proxy to key gateway markets in Asia, suggesting a diversified geographic strategy as a competitive advantage. [[2]] The portfolio consists of quality assets in prime locations. [[2]]

Revenue Streams:

• Rental income [[15]]
• Car parking income [[15]]
• Other operating income (e.g., sale of electricity, compensation income from lease pre-termination) [[15]]

Financial Statement Analysis

Income Statement

• Gross revenue decreased by 7.6% from S\$236.654 million in 1Q FY24/25 to S\$218.616 million in 1Q FY25/26. [[3, 4]]
• Property operating expenses decreased by 8.1% from S\$57.252 million to S\$52.626 million. [[3, 4]]
• Net property income (NPI) decreased by 7.5% from S\$179.402 million to S\$165.990 million. [[3, 4]]
• Finance expenses decreased by 16.4% from S\$59.907 million to S\$50.098 million. [[4]]
• Profit for the financial period after tax decreased by 1.1% from S\$102.889 million to S\$101.771 million. [[4]]

Balance Sheet

• Total assets decreased from S\$16,141.607 million as of 31 March 2025 to S\$15,853.862 million as of 30 June 2025. [[7]]
• Investment properties decreased from S\$15,728.702 million to S\$15,463.448 million. [[7]]
• Total liabilities decreased from S\$6,517.064 million to S\$6,412.484 million. [[7]]
• Net assets decreased from S\$9,624.543 million to S\$9,441.378 million. [[7]]

Cash Flow Statement

• Net cash provided by operating activities decreased from S\$153.472 million to S\$131.245 million. [[9]]
• Net cash used in investing activities increased from S\$8.177 million to S\$15.238 million. [[9]]
• Net cash used in financing activities decreased from S\$154.378 million to S\$133.506 million. [[10]]
• Cash and cash equivalents at the end of the period decreased from S\$125.755 million to S\$137.578 million. [[10]]

Key Facts for Investor Action

• Distribution Per Unit (DPU): The DPU for 1Q FY25/26 is 2.01 Singapore cents, a 3.8% decrease compared to the 2.09 Singapore cents for 1Q FY24/25. [[3, 25]] The distribution consists of 1.50 cents taxable income, 0.34 cents tax-exempt income, and 0.17 cents capital distribution. [[3]]
• Divestments: On 23 July 2025, the Manager entered into Sale and Purchase Agreements for the divestment of TSI and ASY, expected to be completed by 2Q FY25/26. [[2]]
• Aggregate Leverage Ratio: The aggregate leverage ratio increased slightly from 37.7% to 37.9%. [[19]]
• Interest Coverage Ratio (ICR): The ICR increased from 2.8 times to 2.9 times. [[19]]
• Distribution Policy: MPACT’s distribution policy is to distribute at least 90% of its taxable and tax-exempt income. [[2]]

Key Findings and Summary

Strengths:

• Increase in Interest Coverage Ratio (ICR): The ICR increased from 2.8 times to 2.9 times. [[19]]
• Proactive Capital Management: The Manager actively monitors the aggregate leverage ratio and ICR to keep them within statutory and Board’s policy limits. [[19]]

Risks:

• Decrease in Gross Revenue and NPI: Both gross revenue and net property income have decreased compared to the previous year. [[3, 4]]
• Decrease in DPU: The distribution per unit has decreased, which may be a concern for income-seeking investors. [[3, 25]]
• Foreign Exchange Risk: Unfavorable FX impact arising from the depreciating HKD and RMB against SGD negatively affected overseas properties’ performance. [[25]]
• Market Uncertainties: The report acknowledges significant uncertainty and downside risks in the global economy that may affect performance. [[26, 29]]

Company Actions to Improve Profitability

• The company is undertaking active portfolio management, as demonstrated by the proposed divestment of two Japan properties. This is aimed at sharpening focus on quality assets and increasing financial resilience. [[29]]
• The Manager is focused on preserving occupancy levels and implementing prudent cost management measures. [[29]]
• Asset enhancement initiatives will continue on a selective basis. [[30]]

Investment Recommendations

For Current Holders:

Given the decrease in DPU and the presence of market uncertainties, current holders should carefully consider their investment objectives and risk tolerance. While MPACT is actively managing its portfolio and focusing on quality assets, the near-term outlook may be challenging. It may be prudent to hold the stock and monitor the situation, especially considering the active portfolio management strategy to sharpen the focus on quality assets.

For Potential Investors:

Potential investors should weigh the risks against the potential rewards. The decrease in gross revenue, NPI, and DPU are concerning, but the company’s proactive management and strategic divestments could improve its financial position in the long term. Investors should consider the current market volatility and the potential impact on MPACT’s performance before making an investment decision.

Disclaimer: This analysis is based solely on the provided document and does not constitute financial advice. Investors should conduct their own due diligence and consult with a financial advisor before making any investment decisions.

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