Mapletree Logistics Trust Financial Results 3QFY23/24 - The Good and The Bad

MLT released its latest quarterly results yesterday.

 

Did a quick run through and list down the salient points for my own reference as follows.

 

Good

 

Higher distributable amount and DPU Y-o-Y.

 

High portfolio occupancy.

 

Overall positive rental reversions despite negative reversions from China assets.

Relatively low leverage of 38.8%.

 

Low average finance cost of 2.5%. Impressive.

 

>3% interest coverage.

 

Well spread maturing debt profile. <10% of debt maturing in the next two years.

 

About 80% of distributable amount for the next 12 months hedged into SGD. Stabilises impact from Forex.

 

Well diverse geographically in terms of AUM and revenue. No more than 30% from each territory. Low concentration risk.

 

Diversified tenant base in terms of trade sectors. No one sector contributes more than 20% in terms of total portfolio revenue.

 

Largest tenant contributes <5% of total portfolio revenue. 

MLT commits to net zero emissions for Scope 1 and 2 by 2030. I always look out for these data since I'm an environmental guy both personally and professionally.

 

Steady demand for most of MLT's markets except for China.

Bad

Higher borrowings Y-o-Y due to higher renewed rates on unhedged loans. And this trend is expected to continue.

Negative rental reversions from China market expected for next few quarters. And China is the 2nd largest market for MLT in terms of revenue and number of properties.

 

Dividend

 

2.253 cents per unit.

 

To be paid on 20/3/2024.

 

Distribution reinvestment plan (DRP) will also apply to this round of distribution.

 

Issue price of each DRP unit will be priced approximately at 1.85% discount to the adjusted VWAP of ten market days leading to the record date of 1/2/2024.

 

Personal Take

 

Good set of results with average outlook.

 

China woes might be alleviated soon since the Chinese government has announced their set of stimulus to boost its economy. Among the measures is the expected injection of one trillion yuan in long-term capital into the market.

Apart from the financial side, this is also adding a dose of confidence and hope into the market which is urgently needed as reflected in the share price of chinese stocks nowadays.

MLT has always been among my favourite counters due to its strong and stable performance since I first bought into it some 6 years ago.

 

I'm pretty comfortable adding at today's price (1.56) which translates to >5.5% dividend yield. However it would be even better to add closer to 1.44 for bigger margin of safety. This is taking reference from the previous scrip issue price.

Mapletree Industrial Trust Financial Results 3QFY23/24 - The Good and The Bad

MIT released its latest quarterly results today after market hours.

 

Following will be a succinct post for my own reference on some salient points - both the good and bad in my opinion, as well as my personal take on the results.

 

Good

 

Positive rental reversions for all segments.

79.5% borrowings hedged.

Relatively low leverage of 38.6%.

 

Good interest coverage of >4 times.

 

Still healthy portfolio occupancy.

 

Largest tenant only contributes 6% to total portfolio gross rental income. 

Diversified tenants in terms of trade. Less concentration risk for downturn.

 

Maturing debts are quite well spread.

55.6% of AUM is in data centres which is good for now especially in North America where centres vacancy is low and average asking rental rate has been rising for the past two years. 

 

Also moving forward, the rise of artificial intelligence-related businesses should be good news for the data centre segment in general.

Bad

Funding cost below 3% would have been better in this environment. 

 

Distribution to unitholders is increased Y-o-Y partly because of compensation received for 2 and 4 Loyang Lane. Without that, the distribution to unitholders is actually quite flat.

 

Not so good outlook painted by management.

 

Possible hint at flat or declining forward DPU(s) due to possible rising operating expenses and increases in borrowing costs.

 

Dividend

 

3.36 cents per unit.

 

To be paid on 7/3/2024.

 

Personal Take

 

Set of results is not too bad. To be cautious of its outlook for the next three quarters at least.

 

Not likely to add at present price (2.44) unless there is a big positive catalyst. Will continue to add if unit price is closer to 2.40 or lower for bigger margin of safety.

Taking Stock of 2023

Happy 2024 everyone.

2023 passed by relatively fast for me with so many things on hand throughout the year.

I'm glad I managed to squeeze in some things that I wanted to do on the last day of the year.

Changing the bedroom light, going for a haircut, buying some spare parts from the hardware shop, washing my car which is way overdue and updating my investment records.

Mundane things but feel good nonetheless when completed.

 

As usual, I'm writing this post as a wrap up for the year.

 

Family

Both kids are growing up well and with more bickerings now that didi has a wider range of vocabulary and his own thoughts.

 

Sometimes it just amaze me when I see them processing their thoughts and analysing the issue on hand despite their age. Indeed there are times when they behave and speak like an adult.

Jie jie especially, impressed me time and time again with her out-of-the-box thinking. She is the type that will observe on the side and proceed to try her own method to solve the issue. That is a very good trait to me.

 

Another positive thing we observed is that she is a keen learner. She likes to read and often take out her activities books to do on her own accord.

On the other hand, she has a very assertive character and most of the time she wants didi to follow her 'orders'. My wife and I are working on getting her to tone down on this.

 

Assertiveness per se is not a bad thing. But the degree and application of it must be appropriate.

Funnily enough, she is the shy type towards outsiders but once she got to know the person, shy is the last thing on her mind.

Didi on the other hand is just the opposite. He often literally walk up to strangers to chat them up and 'high five' them. My wife and I are working on getting him to tone down on this.

 

He is the playful type and likes to read too though less keen on the activities books.

I guess because of this seemingly polar opposite characters, mayhem breaks out in our household all too often.

Recently I came across a parenting article that suggests letting the kids work out a solution themselves when they fight. I think it is a good method and I intend to try it out.

 

Health-wise, everyone is generally healthy except for the occasional bouts of respiratory illness which are not Covid.

 

We went on a Genting Dream cruise in November and just came back from a trip to Bintan last week. These are good bonding cum educational sessions which I hope to do more often.

 

For now, I just hope for the kids to grow up healthy with good character.

Work

I have been pretty busy on the work front too. Just came back from a Tianjin trip in December where it was freezing cold.

 

In fact it was more than freezing since temperatures hovered around -10 to -15 deg C. A beer I bought from a 7-11 near my hotel froze when I reached my room. The walk from the 7-11 to my hotel room was less than 10 min.

 

Business has improved by leaps and bounds in 2023. There are about two months left before my financial year ends and revenue has almost doubled year-on-year. Bottom line is set to improve too.

On the flip side, there is a concentration risk as most of the contracts are from a single customer.

Hence moving forward, we have to work on maintaining this account while getting new customers onboard.

Sideline

2023 is my first full year doing this sideline. Earned a total of S$8,400 for doing something I love is not bad at all. Apart from the monetary return, I enjoyed other benefits from this sideline such as free gym facility, free parking and working area for me to work on my main job.

Targeting to hit at least S$10,000 from this sideline in 2024 which shouldn't be a stretch.

I am also planning to embark on another sideline in F&B which is another interest of mine. Have found a prospective partner though more detailed discussion is needed. Need to catch up with him on this soon.

Hopefully this venture will work out fine and bring in another source of income for me.

 

Study

Time flies since I started my Masters programme in NUS. So far so good is what I would describe the journey so far. In the blink of an eye, I am due to complete the programme in April 2024.

I am rushing to complete my dissertation now with the last chapter, conclusion and abstract to go. Once done, a big rock would be lifted off my shoulders.

 

Investments

SGD 

 

 

This remains my main portfolio, consisting mainly of income and some growth counters to provide a stable dividend-based return.

 

In 2023 I added some quality counters as stated below when opportunities arose. My strategy was to add monthly whenever possible and this will remain my strategy moving forward.

 

The volatility in 2023 means that the portfolio alternated between green and red throughout the year. Nevertheless the portfolio value was pushed up in the last month when the Reits ran up due to expectations of a pause in rate hikes.

 

Personally I expect the Reits to continue to run up at least for the first quarter of 2024 with the banks remaining flat for the same period.

 

Portfolio Value: $149,242.00
 

P/L (Realised + unrealised): $7,159.45

 

Dividends Collected: $7,790.27

 

Total Accumulated Dividends: $42,538.22

 

Added: Mapletree Logistics Trust, Mapletree Industrial Trust, Ascendas Reit and CapitaLand China Trust 

 

Sold: None

 

USD / HK

 

This portfolio remains in the red mainly due to legacy losses and Alibaba's current share price.

 

Couple of counters are having unrealised gain of ~50%.

 

Portfolio Value (SGD equivalent): $15,389.61
 

P/L (Realised + Unrealised): -$27,710.39

 

Added: BABA

 

Sold: None

 

Summary

 

Total portfolios value at end of 2023: S$164,631.61.

Looking forward to make 2024 a more fruitful year with more time available on hand.