In my previous article here, I pointed out that institutional investors bought Mapletree Logistics Trust’s units lately. This raises a question: Is Mapletree Logistics Trust cheap now? This question is important because if the REIT’s shares are cheap, it might be a good opportunity for other investors to consider buying the REIT.
Unfortunately, there is no easy answer. However, we can still get some insight by comparing Mapletree Logistics Trust’s current valuations with the market’s valuation. The two valuation metrics I will focus on are the price-to-book (PB) ratio and distribution yield.
I will be using the average PB ratio and distribution yield for the 39 REITs that are listed in Singapore’s stock market. With that, let’s look at the comparison below:
Source: Yahoo Finance, OCBC Weekly S-REITs Tracker
From the above, we can see that Mapletree Logistics Trust’s distribution yield is lower than that of the market average, indicating that it’s trading at a higher valuation. Similarly, its PB ratio is higher than that of the market average.
In sum, we can argue that Mapletree Logistics Trust is trading slightly on the higher end of the valuation spectrum given its low distribution yield and high PB ratio when compared to the market average.
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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. Motley Fool Singapore has recommended the shares of Mapletree Logistics Trust.