Mapletree Logistics Trust (M44U) sinks or swims in 2025?

Lifetime Membership A brand new year! In this article, I will talk about Mapletree Logistics Trust (SGX: M44U). The key reason for this blog entry is to note down my thought process as I contemplate to channel more SRS monies in this counter.

For background, Mapletree Logistics Trust (SGX: M44U) is an S-REIT that invests in a diversified portfolio of logistics real estate in Asia Pacific with the aim of providing its unitholders with a stable distribution stream. As at 30 September 2024, it has a portfolio of 179 properties in Singapore, Australia, China, Hong Kong SAR, India, Japan, Malaysia, South Korea and Vietnam.

As a whole, the S-REIT sector has been struggling for the past few years due to the high interest rate environment. Mapletree Logistics Trust (SGX: M44U) is no exception. However, the challenge for Mapletree Logistics Trust has been exacerbated due to its significant exposure to the China market, which has been in a prolonged real estate downturn. In 2024, the unit price of Mapletree Logistics Trust (SGX: M44U) has tumbled nearly 26%.

The Fed’s first jumbo rate cut in September has somewhat stimulated the counter and led to a mini-rally as Mapletree Logistics Trust unit price surged from $1.26 on 12 August to $1.50 on 2 October. However, the counter was brought back to earth following Donald Trump being elected as the next US President. Many analysts have concerns that Trump is going to make good his tariff threats against China which could lead to higher inflations in US, causing US Fed to slow or even halt interest rate cuts in 2025.

For sure, Trump’s tariff plans will hit China’s export and impact Mapletree Logistics Trust’s business. For the past few years, the downturn in China’s economy has caused the logistics assets in China to drag down the operational performance of Mapletree Logistics Trust, leading to lower revenue contribution from China. Even though the Chinese government has unveiled US$1.4 trillion in November 2024 to tackle local government debt problems, it is uncertain if this will help to reverse the country’s real estate slump going forward. The recent spotlight was on Vanke as the Chinese regulator asked insurers to report on the debt holdings of Vanke, China’s fourth largest property developer following defaults by Evergrande Group and Country Garden Holdings.

To add on to the uncertainty, Mapletree Logistics Trust also changed its CEO. Former CEO, Ms Ng Kiat, stepped down and was replaced by Ms Jean Kam Sok Kam on 24 May 2024. Personally, I felt that the change was quite abrupt as I certainly didn’t see it coming as Ms Ng Kiat has been CEO for more than 12 years. There was also no official reason provided by the Board of Directors for the change of CEO, though I guess the ailing unit price of Mapletree Logistics Trust may have played a part in her departure.

To be fair, the ailing Mapletree Logistics Trust share price is not reflective of its financial performances. In fact, under the tenure of Ms Ng Kiat, MLT’s business had been quite resilient despite the challenging operating climate. For the past 5 years, Net Property Income has steadily increased from $389.5 million in FY2018/19 to $634.9 million in FY2023/24. During this period, Distribution Per Unit (DPU) rose from 7.941 cents to 9.003 cents. The financial performances in recent years were particularly impressive given that a number of S-REITs had been adversely impacted by the high borrowing costs and plunging portfolio valuations caused by poor occupancy rates.

As of now, I will reserve my judgement on the performance of the new CEO as I feel it is important to give her at least 3 years to prove her mettle. So my decision making will be based on the merits of recent developments and transactions made by Mapletree Logistics Trust.

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 Mapletree Logistics Trust (SGX: M44U) may be biased.

Mapletree Logistics Trust (M44U) and its financial engineering

Previously, I had written that I would pump in more monies only if there are evidences of MLT turning a corner. That day will surely come. At this juncture, the compelling reason for me is because [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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