Mapletree Logistics Trust share price plunged to 5-year low

Lifetime Membership It has been nearly a year since I wrote about Mapletree Logistics Trust share price performance and I think its time for an update. Year-to-date, Mapletree Logistics Trust share price continued to spiral out of control, falling by a devastating 22%. At the current trading price, the counter has plunged to a 5-year low. Question now is whether the counter has truly bottomed and represents an attractive value for investors to enter.

For background, Mapletree Logistics Trust 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 May 2024, it has a portfolio of 186 properties in Singapore, Australia, China, Hong Kong SAR, India, Japan, Malaysia, South Korea and Vietnam with assets under management of $13.3 billion.

The dismal performance of Mapletree Logistics Trust share price saw former CEO, Ms Ng Kiat, stepping down and being replaced by Ms Jean Kam Sok Kam on 24 May 2024. Personally, I felt that the change was quite abrupt and I certainly didn’t see it coming as Ms Ng Kiat has been CEO for more than 12 years and there was no official reason provided by the Board of Directors for the change of CEO.

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.

The key factor that caused the rupture in the form of Mapletree Logistics Trust share price should be the broader market sentiments. Like most S-REITs, Mapletree Logistics is heavily leveraged and its share price is sensitive to the interest rate trend. In 2023, the market has talked up the possibility of US Federal Reserves slashing interest rates by at least 4 times in 2024. However, we are already halfway through 2024 and US Federal Reserves has yet to signal any interest rate cuts on the horizon.

I bought 16,000 shares when Mapletree Logistics Trust share price was trading at $1.96 in November 2021. As I have bought the shares using my SRS account, I intend to hold the shares for the long-term. This means that my intent of holding the shares is for dividend collections. Nonetheless, the sharp decline in Mapletree Logistics Trust share price means that I have incurred paper loss of 41.533 cents per unit after factoring the distributions collected. Overall, the return is a negative 21%.Previously, I had toyed with the idea of dollar-cost averaging my investment using the spare funds in my SRS account. However, the continuing bearish trend of Mapletree Logistics Trust share price for the past one year has caused a change of heart and led me to buying Singapore Savings Bond instead. As we enter the second half of 2024, what is the possibility of Mapletree Logistics Trust returning to form on the backdrop of potential interest rate cuts by US Federal Reserves in 2024? In this article, I will share my insights.

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 share price may be biased.

Mapletree Logistics Trust (MLT) share price in make or break

In 2023, I had predicted a [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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