Lifetime Membership What a cocktail of headwinds for Mapletree Logistics Trust (MLT). Following the $700 million equity fund raising announced on 23 November 2021, MLT share price plunged from $2.00 to the current low of $1.78. To rub salt into injury, the proposed merger between Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) compounds further misery on MLT share price as market rumours spread like wildfire that the MLT and MINT could be the next merger on the cards.
To put things into perspective, rumours of a merger between MLT and MINT have been brewing for a number of years. To address the market rumours, the management clarified on 10 January 2022 that there was no plan to merge MLT and MINT as both entities have different investment mandates and operate in different asset classes. Despite that clarification, the recent merger between MCT and MNACT rattled MLT share price.
MLT invests primarily in logistics and warehouses assets whereas MINT’s assets comprise of mainly industrial real estates in Singapore and data centres. Both S-REITs share the same sponsor and both are Straits Times Index (STI) components.
MLT has a slightly bigger market capitalization ($8.5 billion) as compared to MINT ($7 billion). Thus, if a merger is to take place, it should be MLT “acquiring” MINT. Given that the share price of the acquiring company usually declines, this may be the reason for the bearish trend of MLT share price in recent days. Year-to-date, MLT share price fell 5.3% vis-à-vis MINT’s decline of 3.3% (at the point of writing).
In my opinion, I hope the merger will not take place as MLT’s competitive edge in the warehouse logistics is rather niche. A merger with MINT could complicate things and create new risk exposures in different sectors like industrial spaces and data centres.
Then again, in life, never say never. The pandemic has led to a wave of consolidation in the S-REIT sector. We have seen the merger between CapitaLand Mall Trust and CapitaLand Commercial Trust in 2020. ESR-REIT and Ara Logos Trust are proposing to be merged. And then there is the MCT and MNACT merger. So, I will not be surprised if MLT and MINT decided to jump on the bandwagon as well.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. I am vested in this counter, so my views on MLT share price may be biased.
MLT share price shaken by $1.4 billion acquisitions
I bought 16,000 shares when MLT share price was trading at $1.96. As I have bought the shares using my SRS account, I intend to hold the MLT shares for the long-term. This means that my intent of holding the shares is for dividend collection. Nonetheless, the sharp drop in MLT share price means that I would need to collect about 2 years of dividends to break-even my capital cost.
The devastating decline of MLT share price is attributed to the market’s violent reaction in [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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