Tuesday, March 27, 2012

Journey To Retirement Part 9 -- MapletreeInd

The ninth part of my investment portfolio in which objective is to create wealth to retire.

Stock : Mapletree Industrial Trust
Mapletree Industrial Trust, MapletreeInd was listed in SGX in 2010 with an IPO price of $0.93.  It is a REIT and of today it has 81 properties from Business Park Buildings, Flatted Factories, Stack-up/Ramp-up Buildings, Light Industrial Buildings and Warehouse across the island in its portfolio.  Its sponsor is Mapletree Investment Pte Ltd which also owns Mapletreelog and MapletreeCom in which both also listed in SGX.  In its latest 3Q FY2011 earning dated January 2012, it has a NAV of $0.96 and an aggregate leverage ratio of 39.1.  Was vested during the IPO at $0.93 and with a preferential share offering in 2011 of every 2 for 25 at $1.06, my average holding price stands at $1.007.  As a REIT, it has to be classified under "income stock" in my investment portfolio mainly due to its strong sponsorship in Mapletree Investment Pte Ltd and a distribution yield high enough to offset inflation.  Since the initial of average $0.018 DPU per quarter, MapletreeInd has managed to grow its asset and able to distribute at least $0.02 DPU per quarter presently and that translates to at least 7.9% dividend yield in my investment portfolio.  Am also waiting for opportunity to increase my holding in MapletreeInd and targeting when price dips below its NAV.  Recession scenario will no doubt be the best opportunity.

Potential Upside :
Like all REITs, the potential upside is for MapletreeInd management team to acquire more yield-accretive assets to grow its portfolio and rental income which allows for more DPU.  Currently, MapletreeInd's assets are mainly in Singapore and with the limited space in Singapore and facing competition from competitor like Ascendasreit, should MapletreeInd able to venture overseas in assets expansion like the case of Mapletreelog, this will no doubt provide the best potential upside in term of capital price gain and distribution income to unitholders.

Potential Downside :
The lacking of yield-accretive assets acquisition and high leverage ratio is no doubt the basic potential downside of any REIT.  As of data from January 2012 earning report, MapletreeInd has a leverage ratio of 39.1, though it is below the upper limited of 60 but still slightly above the average comfortable value of 30%.  Hence, that is something to be careful when the management team trying to acquire more assets and at the same time keeping the leverage ratio down.

Personal Expectation :
As an "income stock", the minimum expectation for MapletreeInd is its ability to maintain at least $0.015 DPU per quarter even if economy is in recession scenario.  The secondary expectation is the management ability to grow the REIT in term of yield-accretive assets acquisition even if it has to venture overseas to do it.  By doing so, this will provide unitholders no only increasing distribution payout but also capital gain from the stock.

Mapletree Industrial Trust

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