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What Investors Should Know About Mapletree Industrial Trust’s Latest Earnings and Valuation

Mapletree Industrial Trust (SGX: ME8U) is a REIT with 85 industrial properties in Singapore and 14 data centres in the US (through a 40%-owned joint venture).

There are two things about the REIT that investors may want to know about right now: Its latest financial performance and valuation.

Financial performance

The table below shows important items from Mapletree Industrial Trust’s income statement for the third quarter of its financial year ending 31 March 2018 (FY17/18). The reporting period is from 1 October 2017 to 31 December 2017.


Source: Mapletree Industrial Trust FY17/18 third quarter earnings presentation

We can see that the REIT delivered strong year-on-year growth in the reporting quarter. Gross revenue was up by 8.3% while net property income jumped by 11.7%. These ultimately led to a 1.8% increase in the REIT’s distribution per unit (DPU).

Mapletree Industrial Trust credited its growth to new revenue contributions from its build-to-suit project for HP Singapore, which more than offset lower occupancy in its overall portfolio.. The REIT’s portfolio had a committed occupancy rate of 90.1% at end-2017, the lowest seen since the fourth quarter of FY14/15.

Tham Kuo Wei, the chief executive officer of Mapletree Industrial Trust’s manager, shared the following comments on the REIT’s latest acquisitions in the earnings update:

“The completion of our first overseas acquisition of 14 data centres in US is in line with the expansion of MIT’s investment strategy and broadens our presence in the growing data centre sector. The acquisition portfolio with long leases on freehold land will strengthen MIT portfolio and enhance the stability of returns to Unitholders. Together with the development projects, this strategic acquisition will help to mitigate headwinds faced by the Singapore industrial portfolio.”

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.

The table below shows Mapletree Industrial Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 41 REITs that are in Singapore’s stock market.


Source: SGX Stock Facts

We can see that Mapletree Industrial Trust is trading at a premium to the market average due to its higher PB ratio and lower distribution yield.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation on Mapletree Industrial Trust.