Crazy Rich Mapletree Logistics Trust
From a high of $1.36 in January 2018, unit price of Mapletree Logisitics Trust plunged to the current $1.24 level. The correction must have caused much agony for investors even if the DPU of $0.06 issued in 2018 had been factored in. In my humble opinion, the fall of Mapletree Logistics Trust unit price could be attributed to the equity fund-raising exercises in recent months.
Private Placements
On 19 September 2019, Mapletree Logistics Trust launched yet another private placement to raise estimated proceeds of about $475 million to fund the acquisition of the 5 logistics properties from CWT International Limited. A total of 309,917,000 New Units will be issued pursuant to the Private Placement, at discounted price between $1.196 and $1.234 per new unit.
This is the third private placement by Mapletree Logistics Trust in a row since August 2017. In May 2018, Mapletree Logistics Trusts launched a $220 million private placement to fund the acquisition of a 50.0% interest in each of 11 Hong Kong special purpose vehicles. Prior to that, in August 2017, a massive equity fund-raising consisting of private placement and preferential offering of $670 million was launched to fund the acquisition of Mapletree Logistics Hub Tsing Yi, located at 30 Tsing Yi Road, Hong Kong.
It certainly seems that Mapletree Logistics Trust has no problem attracting investors because each of the three private placements was oversubscribed and saw strong participation from institutional, accredited and other investors. Presumably, this was due to the strong support from major shareholder, Temasek Holdings.
In the latest private placement, Temasek Holdings, through DBS, subscribed 1.8 million new units. The May 2018 exercise saw Temasek Holdings accumulating only 417,000 new units while the August 2017 exercise saw Temasek Holdings snapping up 7.5 million new units.
Valuation of Mapletree Logistics Trust
With a strong backer like Temasek Holdings, Mapletree Logistics Trust seems like a safe bet. Indeed, through the private placements, Temasek Holdings had increased its stake in this REIT from 33% to 33.65%. For big boys like Temasek Holdings, they have no qualms in increasing stakes in Mapletree Logistics Trust even when the unit price falls. This is because as long-term investors, they focus their attention more on the yield rather than the unit price movements.
With a Price/Book Value of just 0.99 and P/E ratio of 7.173, Mapletree Logistics Trust unit price is trading at a very attractive level now. Dividend yield is 6.2%. Revenue had been consistently growing for the past five years, rising from $310 million in FY2014 to $395 million in FY2018. It also appears to me that the management has achieved [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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