The Positives
The Negatives
Outlook
The outlook is stable to positive. Oversupply situation is improving, with the tapering of new supply in 2018. MINT has two projects coming on stream in 2018 – Kallang AEI (leasing is ongoing) and data centre BTS (no occupancy risk) which should contribute positively to the portfolio.
Maintain Neutral; higher target price of $2.15 (previously $1.99)
We have revised our FY18e/FY19e revenue estimates 1.7%/3.9% higher than previous. DPU estimates for FY18e/FY19e have been raised 3.8%/9.2% higher. Key positives are the higher proportion of Hi-Tech Buildings segment in the portfolio following the injection of the US data centres, and the relatively low gearing. Estimated yield of 5.8% should be stable with some upside, but we find valuation uncompelling. Our target price represents an implied 1.48 times FY18e P/NAV multiple.
Update to New Data Centre BTS
The fourth storey structure slab has been completed and installation of external façade has commenced. The project remains on track for completion in 2H 2018.
Figure 1: BTS Project – New Data Centre
Source: Company 3QFY17/18 Financial Results Presentation, 23 January 2018
Relative valuation
MINT is trading above the peer average P/NAV multiple and at a lower 12M-trailing yield than the peer average.
Historical valuation
Figure 2: 12M-forward P/NAV (x) more than +2 std dev above historical average
Richard covers the Transport Sector and Industrial REITs. He graduated with a Master of Science in Applied Finance from the Singapore Management University. He holds the CFTe and FRM certifications and is a CFA charterholder.
He was ranked #2 Top Stock Picker (Asia) for Real Estate Investment Trusts in the 2018 Thomson Reuters Analyst Awards, and ranked #2 Top Stock Picker (Singapore) for Resources & Infrastructure in the 2016 Thomson Reuters Analyst Awards.