Tuesday 9 July 2024

MIT vs MLT. Which To Choose?

As mentioned in an earlier post in June, I have more funds to add to my portfolio this month.
Coupled with my aim this year to veer my portfolio to be less Reits-concentrated, I did two rounds of stock screening to uncover suitable counters for further study.

The screening did shown some promising counters on first glance. However I eventually decided against adding into these due to various reasons such as low trading liquidity, outlook of business, unsustainable / irregular dividend payment or the business nature simply doesn't align with my values (as is the case for one of the counters).
Long story short, I went back to look at my existing holdings and decided to take this opportunity to average down on couple of them.
I would have added into Ascendas Reit if it is not the top position in my portfolio now.
So I looked into Mapletree Logistics Trust and Mapletree Industrial Trust.

All three mentioned are among the fastest to recover during an upturn.

Anyway I did a quick study on the annual reports of MLT and MIT to guide my decision.
Sharing below summary for readers and fellow investors.
Notes: Data gathered from respective FY23/24 annual report. Both MIT and MLT did EFR in this period.

Sentiments from the findings

1) Both are well managed in terms of maintaining their portfolio occupancy, achieving positive rental revisions, increasing their distributable income and managing their debt profiles --> increasing income and well-managed debt are two of the most important attributes for any business aren't they?
2) However they are affected by certain macro factors e.g. in the case of MLT, China's oversupply of warehouse spaces.
3) Interest rates and Forex effect are and will always be something to look out for. In my opinion the management of these metrics is what set the good Reits apart from the mediocre ones.
4) Especially in times like now, points 2 and 3 above form the basis of analysis for Reits investment.

5) Buy into MIT if you believe in the future of DCs and don't mind the concentration risk in geography.

6) Buy into MLT if you believe in the importance of logistics and don't mind the potential slight drop in DPU yield while waiting for the chinese assets to recover.

My personal mantra has always been technology develops the world (DC) and logistics moves the world (globalisation and commerce). In this century there's simply no avoiding either.

Hence I did the best thing I can in this situation. I added to my holdings for both counters in around equal quantum - MIT @ $2.10 and MLT @ $1.26.

Quick tip: If you do not have time or do not want to go through the entire annual report, it would be useful to at least read through the Chairman and CEO message to unitholders.