Mapletree Pan Asia Commercial Trust's dividends fall further. Is it a bargain at 6.5% yield?

What happened?

Mapletree Pan Asia Commercial Trust (MPACT) reported that its distribution per unit (DPU) for the third quarter fiscal year 2023/2024 ended December 2023 decreased to 2.20 Singapore cents from 2.42 cents in the same quarter of the previous year. 

This would bring Mapletree Pan Asia Commercial Trust’s 9M FY2023/24 DPU to 6.62 Singapore cents, reflecting a 10.1% decrease compared to 7.36 cents in YTD FY22/23.

Mapletree Pan Asia Commercial Trust’s share price rose slightly after the results to reach a S$1.46 on 2th February. However, the gains have since been reversed, and Mapletree Pan Asia Commercial Trust’s share price has fallen back to S$1.39 as of 9 February 2024.

Let us find out more about Mapletree Pan Asia Commercial Trust’s latest earnings what it they mean for the share price. 

What you need to know about Mapletree Pan Asia Commercial Trust results

#1 – Distributions impacted by higher financing costs 

Mapletree Pan Asia Commercial Trust’s distributions were impacted by higher financial costs. 

Net finance costs, increased to S$57.4 million from S$50.3 million, marking a 14.1% rise. 

This increase was primarily due to higher interest rates affecting the cost of borrowing.

Net Property Income (NPI) saw a modest increase of 1.7% year-over-year (YoY) to S$182.4 million.

This was driven by strong performance in Singapore and steady earnings from Hong Kong and Japan, despite forex challenges.

#2 – Portfolio occupancy improved

The portfolio committed occupancy rate improved to 96.7% from 96.3% as at September 2023.

Notably, mTower was backfilled to 98.6% occupancy, and Festival Walk maintained 100% occupancy. 

Singapore properties, including VivoCity, showed significant rental uplifts, indicating robust demand and operational success across markets.

Over the first nine months of fiscal year 2023/24, MPACT achieved positive rental reversion of 4.1% across its portfolio. 

The Singapore properties stood out with significant rental uplifts ranging from 6.7% at Mapletree Business City to 14.2% at VivoCity.

#3 – Leverage rate rises slightly

As of 31 December 2023, Mapletree Pan Asia Commercial Trust’s aggregate leverage ratio was 40.8%. 

This represents a slight increase from 40.7% as at 30 September 2023.

The weighted average all-in cost of debt was 3.33% per annum (annualized based on YTD ended 31 December 2023). 

MPACT's has swapped more HKD loans into CNH and increased the fixed rate debt proportion from 79.9% to 85.0%, to mitigate the impact of rising interest rates.

What would Beansprout do?

The performance of Mapletree Pan Asia Commercial Trust's assets remains healthy with a portfolio occupancy rate of 96.7%.

However, we would be watchful of its gearing ratio of 40.7%, which is above the sector average of 37.6%

At the current share price, Mapletree Pan Asia Commercial Trust is expected to offer a fairly attractive dividend yield of 6.5%, above its historical average of 5.6%. 

Mapletree Pan Asia Commercial Trust’s current price-to-book value of 0.8x is below its historical average of 0.9x.

Analysts seem to a slightly positive view on Mapletree Pan Asia Commercial Trust’s share price outlook. 

Based on the latest data as of 7 February 2024, the average share price target is S$1.62. This would be 17% above Mapletree Pan Asia Commercial Trust’s share price of S$1.39.

To find out the dividend payment dates and calculate the amount of dividends you will receive, check out our Mapletree Pan Asia Commercial Trust stock page.

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