In the most recent 2QFY2026, net property income from Festival Walk, its mall in Hong Kong, was $33.4 million, or 20% of the total of $166.2 million. In comparison, in the year- earlier quarter, NPI from this Hong Kong property was $36.9 million, or 21.7% of the 2QFY2025 total of $169.8 million. Total NPI for the REIT was down 2.2% y-o-y to $163.9 million. Besides lower utilities costs, MPACT’s bottom line was helped by a significant 16.4% y-o-y drop in finance costs to $47.4 million.
Morningstar’s Xavier Lee, describing the business of MPACT as “no-moat”, has kept his three-star rating out of five, along with a fair value estimate of $1.52. From his own ground checks, Lee has observed strong weekend footfall at the newly refurbished basement of VivoCity. On the other hand, he notes that MPACT’s overseas properties remain weak. “We think the units are fairly valued currently, and investors should wait for a more attractive entry point,” says Lee.
Relative to Morningstar’s Lee, OCBC is even more restrained. In its Oct 23 note, OCBC maintained its “hold” call and $1.45 fair value on this stock. “While negative rental reversions at its Festival Walk mall in Hong Kong have been narrowing, we remain watchful of structural challenges arising from the leakage of retail sales from Hong Kong to Shenzhen, China,” says OCBC.
According to OCBC, the outlook for MPACT’s China properties remains challenging too, with conditions likely to be softer over the next 12 months. OCBC observes that MPACT’s China properties enjoyed higher occupancy but suffered from large negative rental reversions, which suggests that the REIT’s priority is to retain tenants.
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MPACT’s story in Singapore is not all full steam ahead either. Leasing progress at Mapletree Business City was slower-than-expected, as some tenants that were initially looking to relocate outside of the CBD decided against so due to capex involved from such a shift. As such, it would take time to bump up MBC’s occupancy to the 95% and above level, says OCBC.
Geraldine Wong and Derek Tan of DBS Group Research, on the other hand, are upbeat that things are turning for MPACT and that earnings ought to bottom in the current year ended March 31 2026. Rental reversions at Festival Walk dipped again but rents should stabilise in the coming 1 to 2 years as Hong Kong’s overall retail sector is deemed to have reached a bottom and the stage is set for a rebound. Three consecutive quarters of higher retail sales y-o-y further reinforced this year.
The two key Singapore assets, VivoCity and Mapletree Business City, should further benefit from the completion of the Circle Line loop in 2026. As interest costs drop, MPACT should enjoy upside to its earnings, with a 4% DPU uplift projected. The completion of AEI at VivoCity might add another 1%, according to Wong and Tan.
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They also point out that MPACT’s gearing eased 0.8 percentage points y-o-y to 37.6%, or its lowest level since the merger between the then Mapletree Commercial Trust and Mapletree North Asia Commercial Trust.
They believe that with a more favourable interest rate environment, MPACT may be inspired to acquire and grow earlier than market expectations, instead of merely divesting. “An acquisition in Singapore will repivot the portfolio back to Singapore, its best performing geographical market by far,” state Wong and Tan, who have kept their “buy” call along with a higher target price of $1.65, up from $1.60.
Krishna Guha of Maybank Securities has similarly raised his target price from $1.35 to $1.55, having factored in better operating trends along with lower costs of equity. “Notwithstanding overseas headwinds and fair valuation, house view of lower rates, resilient Singapore and proactive asset and capital management keep us on ‘buy’,” he says.
Jonathan Koh of UOB Kay Hian, among his peers, is the most bullish, given how MPACT benefits from resiliency and growth of its Singapore properties. “VivoCity continues to be enhanced and benefits from the recent pick-up in tourist arrivals and MICE events, and the expansion at Resorts World Sentosa. MBC should see progressive backfilling of vacant space,” says Koh, who has maintained his “buy” call and $1.84 target price, adding that the REIT is trading at an attractive FY2027 DPU yield of 5.9%.
