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Mapletree Logistics Trust Faces Challenges in China Operations


Mapletree Logistics Trust (MLT) experienced a 4.3% decline in unit prices, making it the largest loser among Straits Times Index constituents. This drop comes despite a small increase in quarterly profit. The decline in MLT’s unit prices exceeded the overall weakness observed in Singapore’s real estate investment trust (REIT) sector, resulting in a year-to-date loss of 10%.

In the latest quarter, MLT reported a 2.1% rise in gross revenue to S$184.0 million ($137.3 million) compared to the previous year. Net property income also increased by 1.5% to S$159.5 million. However, MLT cautioned about anticipated challenges in its China operations in 2024 due to a “challenging leasing environment.” At the end of 2023, 19% of MLT’s assets under management were located in China.

Despite concerns about China, analysts remain optimistic about MLT’s overall performance. Maybank analyst Krishna Guha stated that the company’s earnings appeared “fairly stable,” with positive year-over-year numbers on key line items that surpassed his estimates. Similarly, Citi analyst Brandon Lee acknowledged the challenging market conditions in China but believes that most of the negatives have already been priced into MLT’s stock. He holds a buy rating on the REIT with a target price of S$1.85, although he expects a “partial negative share-price impact” due to the challenges in China.

While MLT may face ongoing challenges in China, analysts believe that its other markets, including Singapore, Hong Kong, and Australia, hold a positive outlook. The REIT is expected to perform well in these markets.

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