In the most recent 2QFY2026, net property income (NPI) from Festival Walk, its mall in Hong Kong, was $33.4 million, or 20% of the total of $166.2 million. In comparison, in 2QFY2025, 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 utility 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, with conditions likely to remain softer over the next 12 months. OCBC observes that MPACT’s China properties enjoyed higher occupancy but experienced significant negative rental reversions, suggesting the REIT’s priority is tenant retention.
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MPACT’s story in Singapore is not all rosy, either. Leasing progress at MBC was slower than expected, as some tenants who had initially considered relocating outside the CBD decided against it due to the required capex. As such, it would take time to raise MBC’s occupancy to 95% or above, 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 FY2026 ended March 31, 2026. Rental reversions at Festival Walk dipped again, but rents should stabilise in the coming one to two 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 since the start of the year has further reinforced this view.
The two key Singapore assets, VivoCity and MBC, should further benefit from the completion of the Circle Line loop in 2026. As interest costs decline, MPACT should see upside to earnings, with a 4% DPU uplift projected. The completion of asset enhancement initiatives (AEI) at VivoCity might add another 1%, according to Wong and Tan.
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.
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They believe that with a more favourable interest rate environment, MPACT may be inspired to acquire and grow sooner than market expectations, rather than 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, factoring in better operating trends and lower cost 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.
Among his peers, Jonathan Koh of UOB Kay Hian is the most bullish, given MPACT’s resilience and growth in its Singapore properties. “VivoCity continues to be enhanced and benefits from the recent pick-up in tourist arrivals and MICE or meetings, incentives, conferences and exhibitions, 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%.
