Mapletree Logistics

Mapletree Logistics

Trust | Buy

Fair value: $1.34

June 21 close: $1.22

Broker: OCBC Investment Research, June 21

The ongoing trade friction between the US and China has undoubtedly spooked equity markets and cast a pall over the outlook of global trade and, correspondingly, logistics-related securities.

Mapletree Logistics Trust (MLT) completed the acquisition of a 50 per cent interest in each of 11 logistics properties in China on June 6 for a total acquisition cost of one billion yuan (S$209 million). Sponsor Mapletree Investments holds the remaining 50 per cent stake. Following the acquisition, China is expected to contribute 9 per cent of its pro forma portfolio valuation and 11 per cent of its pro forma FY2018 net property income, compared with 5 per cent and 6 per cent previously, respectively.

While this may raise concerns over MLT's exposure to China amid the trade spat, a significant portion of its underlying end-user revenue from China is derived domestically. Hence, we see limited impact on earnings.

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