I reads MLT results, didn't find anything so bad enough to justify the plunge.
*CLSA: SG Highlights*
*Suntec Reit - SELL (Stretched)*
Despite weaker overseas performance, the Singapore portfolio held firm, with respectable operating metrics for FY23. Rent reversions for office and retail were 12% and 22% in FY23, with management guiding +5% and 10-15% for office and retail respectively in FY24. Gearing was unchanged despite cap rate expansion for overseas assets, and Suntec retains among the highest gearing among S-Reits. We trim earnings by ~2% to factor in elevated interest rates and downgrade to SELL.
*Mapletree Logistics - U-PF (Headwinds from China)*
Sustained weakness in China portfolio and the strength of the Singapore dollar continued to drag on MLT’s earnings. Operating metrics also moderated with occupancies easing by 100bps to 95.9% while China saw negative reversions of 9.4%. Management guided that there could be negative double-digit reversions in the coming quarters given the ongoing pressure in China. Incorporating the latest acquisitions and divestments, as well as lower rent assumptions for China, we trim our DPU forecast by 4.4% for FY25/26CL, lower our TP from S$1.80 to S$1.65, and downgrade from O-PF to U-PF.
