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Mapletree Commercial Trust
Continued recovery
■ 2H/FY22 DPU of 5.14/9.53 Scts within expectations, at 57.8%/100.3% of our FY22 forecast.
■ Achieved positive rental reversions amid higher portfolio occupancy.
■ Reiterate Add, with an unchanged TP of S$2.18.
2H and FY3/22 results highlights MCT reported 2HFY3/22 gross revenue of S$255.8m and NPI of S$198.8m, up 4.9% and 4.7% hoh respectively, thanks to higher revenue across all properties, except Mapletree Anson, and lower rental rebates vs. a year ago. Inclusive of S$15.7m of retained income released, income available for distribution was S$170.5m (+16.4% hoh), translating to DPU of 5.14 Scts. FY22 DPU of 9.53 Scts (+0.4% yoy) was in line at 100.3% of our forecast.
The trust revalued its portfolio up 0.4% (vs. Sep 2021 level) to S$8.8bn. Portfolio occupancy improved qoq to end FY22 at 94.3%, with committed occupancy at a higher 97%. Gearing as at end-FY22 was 33.5%, with all-in cost of debt remaining stable at 2.4%.
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Keppel Corporation
Strategy gradually bearing fruits
■ We see signs of KEP’s strategy bearing fruit with divestment of Keppel Logistics, Keppel Infra decarbonisation solutions and asset monetisation.
■ 1Q22 profits were not disclosed but KEP said it rose yoy. All segments grew yoy other than Urban Development.
■ All eyes are still on the definitive agreement with Sembcorp Marine on the merger of KEP O&M by 30 Apr. Maintain Add and SOP TP of S$7.20.
Revenue up 9% yoy, down 34% qoq, net profit higher yoy KEP’s 1Q22 revenue of S$2.1bn (+9% yoy) was in line with our estimates at 24%/25% of our FY22F and consensus. Revenue across all segments grew yoy except for Urban Development. Keppel Infrastructure delivered the highest revenue at S$994m (+57% yoy, -32% qoq), mainly due to higher power and gas prices and sales. KEP monetised S$332m of assets in 1Q22 and exceeded S$3bn asset monetisation since Sep 2020 (S$5bn target by 2023). Net gearing stood steady at 0.69x.
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Digital Core REIT (DCREIT SP)
1Q22: Bridge Over Troubled Waters
DCREIT’s 1Q22 results were in line with expectations with all 10 data centres remaining fully occupied. DCREIT has hedged 50% of its borrowings to fixed interest rates. Assuming the Fed Funds Rate averages 2.5%, we estimate DCREIT’s average cost of debt would increase to 3.2% in 2023. We trim our 2023 DPU forecast by 9%. DCREIT provides a distribution yield of 4.6% for 2023 (KDCREIT: 4.9% and MINT: 5.6%). Downgrade to HOLD. Target price: US$1.10.
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Keppel Corp (KEP SP)
1Q22: Energy And Environment Segment More Than Offsets China-related Weakness
KEP reported a 9% yoy increase in 1Q22 revenue to S$2.1b, largely in line with our estimate. The highlight of the quarter was the energy and environment segment which saw a 43% yoy jump in revenue while urban development suffered due to COVID-19-related lockdowns in China. With project launches being back-end loaded in 2H22, this segment could yet deliver a turnaround this year. Maintain BUY. Upgrade target price to
S$7.25 ($6.94 previously).
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Mapletree North Asia Commercial Trust (MAGIC SP) - Time to lock in profits
Mapletree North Asia Commercial Trust’s (MNACT) portfolio comprises Festival Walk mall in Hong Kong, two properties in China (Beijing and Shanghai), eight commercial properties in Japan and one office property in Seoul, Korea. MNACT’s financial year ending 31 Mar 2022 (FY22) performance saw a recovery from FY21, although this was stifled by the fifth Covid-19 wave in Hong Kong. Whilst MNACT had previously been positioned as a pure-play overseas commercial REIT, it announced on 31 Dec 2021 a proposed joint merger with Mapletree Commercial Trust, and a revision of the Trust Scheme of Arrangement on 21 Mar 2022, with the addition of a cash-only consideration. If successful, the merged entity would become one of the largest REITs by market capitalisation listed in Asia, and we believe this would help to reduce MNACT’s concentration risks in China and Hong Kong, significantly bolster its scale, and lower its cost of capital. SELL.
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Axis REIT
Back on a recovery axis in 1QFY22
■ 1QFY22 results were in line; core net profit grew 24.5% yoy, driven by
contributions from new assets and positive rental reversions.
■ 1Q22 operating stats remained healthy, while growth in logistics/warehouse
assets is underpinned by RM120m potential new acquisition targets.
■ Retain Add rating and RM2.34 TP (FY22-24F dividend yields of 5.1-5.7%)
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