MPACT, which also owns office and business park properties in Singapore such as Mapletree Business City (MBC), mTower and Mapletree Anson were “resilient” although the REIT’s management cautioned weaknesses overseas in Shanghai, China, and Chiba, Japan.
While Koh sees that MPACT provides stability from diversification in its geographical presence on the whole, the analyst has cut his FY2025 distribution per unit (DPU) estimates by 6.6%. This is due to lower contributions from China and further depreciation of the Chinese yuan (CNY) and Japanese yen (JPY) of 4% and 10% y-o-y respectively against the Singapore dollar (SGD).
“We estimate revaluation losses of $204 million from MPACT’s China properties at end-FY2024, assuming: cap rate expansion of 25 basis points (bps), occupancy further declining to 85% (2QFY2024: 88.9%), and CNY depreciating 4% against SGD. We expect the lower portfolio valuation to cause aggregate leverage to increase by 1.0 percentage points to 41.7%,” he writes.
Based on his estimates, MPACT is trading at a FY2025 distribution yield of 6.3% and P/NAV of 0.79x.
His target price has been lowered to $1.68 from $1.80 previously, based on a cost of equity (COE) of 7.25% and terminal growth of 2.2%.
Units in MPACT closed 1 cent higher or 0.73% up at $1.38 on Dec 1.
