Abstract: Analyze the fundamentals of business features, geographical distribution of property portfolio and development strategies of Mapletree Logistics Trust (SGX:M44U). Enable you to have a better understanding of benefits and drawbacks of this REIT.
Business sector of Mapletree Logistics Trust
The headquarter of Mapletree Logistics Trust (SGX:M44U) is situated in Singapore. It possesses a series of logistics business related properties internationally which provide stable rental collection. Its property types include warehouses and logistics distribution facilities.
Geographical distribution of property portfolio
The countries or regions where the properties are distributed and the number of properties in each country or region: Singapore (52), Mainland China (30), South Korea (18), Japan (18), Malaysia (15), Australia (12), Hong Kong (9), Vietnam (7) and India (2).
Source: 2020/21 Financial Annual Report of Mapletree Logistics Trust
As we can be seen from the graphs below, the top four countries or regions with the highest contribution to property asset value and gross revenue are ranked by Singapore, Hong Kong, Mainland China and Japan. It can be seen here that although Hong Kong has only 9 properties, which is the third from the least number of properties, it ranks the second highest contributor in terms of property asset value and gross revenue. It can be seen that Hong Kong’s property value is expensive and the income-generating power is also very strong.
Source: 2020/21 Financial Annual Report of Mapletree Logistics Trust
Source: 2020/21 Financial Annual Report of Mapletree Logistics Trust
Market overview
Mapletree Logistics Trust is a real estate investment trust listed on the Singapore Exchange (SGX). Its Singapore stock code is M44U. The current stock price is SG$2.04, the market value is SG$8.75B, the 52-week range: SG$1.77-2.21, the price-earnings (PE) ratio is 18.25, and the dividend yield is 4.08%.
Source：https://sginvestors.io/sgx/reit/m44u-mapletree-log-tr/share-price-history
Dividend distribution record
Next, let us take a look at the distribution history of Mapletree Logistics Trust. This Reit pays quarterly. In fact, many Singapore Reits pay quarterly dividends. This is the benefit of investing Singapore Reit.
Source: https://www.mapletreelogisticstrust.com/Investor-Relations/Distribution/Distribution-History.aspx
From the above figures, from the fiscal years 2007 to 2021, the annual distribution per unit has increased by about 4.5% on average year-on-year. Although the annual growth rate of the dividend distribution is not very large compared to other Reits, the dividend distribution is stable. In the 16 years since the listing, the dividend has only been reduced in 3 years. Even the serious Covid-19 pandemic last year did not affect the dividend distribution. It is actually quite strong in stable distributing dividends compared to many bank stocks.
Merge and acquisition aggressively
The M&A of Mapletree Logistics Trust (SGX: M44U) is very active. It currently holds a total of 160 properties, distributed in 8 different markets, and will add a ninth market which is India at the end of this financial year. In the latest annual report 2020/21, total revenue increased by 14.3% and net property income rose by 13.8%. The results are very good. The company has actively carried out M&A and renovated existing properties to increase revenue in the past 24 months. Even after the rental concession or exemption for some tenants during the pandemic and the divestiture of 6 properties in the previous financial year, the company’s revenue can maintain good development. In addition, distributable income increased by 10.4% year-on-year.
In this financial year, 19 modern logistics-related properties were acquired in Australia, Mainland China, Japan, India, Malaysia, South Korea and Vietnam, respectively. As well as the remaining 50% of the interests in 15 properties in Mainland China were also acquired. The property portfolio value increased by 17.4% year-on-year to SG$10.8B, mainly due to acquisitions and capital expenditures involving SG$1.6B. Net asset value per share increased by 9.9% year-on-year to SG$1.33.
In addition, the partnership has been extended to some large e-commerce companies including JD.com and Cainiao. They have become the top ten customers of Mapletree Logistics Trust (SGX: M44U).
Project case in this financial year
The second phase of Mapletree Ouluo Logistics Park in Shanghai has completed the redevelopment project of SG$70M, which has developed the property into a two-storey modern logistics facility, and the total gross area has increased by 2.4 times to 80,700 square meters. Moreover, since the location is close to Shanghai Pudong International Airport, it attracts a large number of third-party logistics companies’ rental demands. Even during the pandemic, the entire area has been fully leased within three months after its completion.
Source: https://www.mapletreelogisticstrust.com/Customer-Solutions/~/link.aspx?_id=EB46BDA927FB4D42ACB524BEF5D0B3D5&_z=z
Source: https://www.mapletreelogisticstrust.com/Customer-Solutions/~/link.aspx?_id=EB46BDA927FB4D42ACB524BEF5D0B3D5&_z=z
Source: https://www.mapletreelogisticstrust.com/Customer-Solutions/~/link.aspx?_id=EB46BDA927FB4D42ACB524BEF5D0B3D5&_z=z
Added to MSCI Singapore Index
Mapletree Logistics Trust (SGX: M44U) was added to the MSCI Singapore Index in May 2020 last year, which can increase the company’s reputation and increase global investors’ recognition and confidence in the company, as well as increase the trading liquidity of this Reit.
Investment rationale
When considering whether to invest in this Reit, you should mainly consider if you have confidence in the development of the global logistics industry. If you are like me, believe that the development and importance of the global logistics industry in the next 5 to 10 years will be even better and more important than they do today, then there is really no reason to doubt the development of this Reit.
Quoting from the message of the Chairman and CEO in the 2020/21 fiscal year report of Mapletree Logistics Trust (SGX: M44U): “Our objective to build a resilient and future-ready portfolio also entails a constant review of the relevance and positioning of each property.” This strategy makes me feel that the management is so reliable that they will not forget to be cautious while developing the business aggressively. This is actually very important. If a Reit is so conservative that it just depends on its inherent properties to collect rent and has no ideas how to better grow the asset values and increase rental income in the long run. This Reit is meaningless and will not be able to help your assets to appreciate. However, blindly expansion and acquisitions are even more dangerous. Therefore, it is necessary to make good use of your own advantages in a timely manner and formulate a winning strategy based on the development trend of the industry you are in. The property portfolio should also be reviewed from time to time. Property renovation and optimization will increase its asset value as well as revenue; at the same time, divesting properties with limited developmental imagination so as to invest the capital for development in properties with better improvement possibilities, this of course will require the management’s vision, experience and courage. Mapletree Logistics Trust gives me full confidence in the development of the company.
Source: 2020/21 Financial Annual Report of Mapletree Logistics Trust
As can be seen from the map above, Mapletree Logistics Trust (SGX: M44U) has a comprehensive plan for its development strategy and layout throughout the Asia-Pacific region. As the world’s largest exporter, China’s status as the world’s factory is believed to be maintained for a period of time. At the same time, many Southeast Asian countries are also actively developing manufacturing business. On the other hand, the globalization of online e-commerce will only develop more and more rapidly and maturely, and thus the demand for global logistics services will continue to expand. In this context, Mapletree Logistics Trust is constantly seizing opportunities, clearly positioning, and actively developing the leasing business of rental property providers supporting the logistics industry.
Mapletree Logistics Trust (SGX: M44U) may not be the most eye-catching Reit in recent years; however, I believe that with the company’s active global layout, especially in the Asia-Pacific region, not will it be able to provide stable dividend distributions, but it will also offer you the opportunity for appreciating the stock price in the near future.
My Reit portfolio record
Right now, I am managing a “Fixed income portfolio” for my retired family members. A large part of the portfolio is invested in Reit. If you are interested, you can check it out here. In addition, I also explained the advantages and disadvantages of investing Reit in a previous article, you may have a look on it as well.
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