On Thursday, Citi reaffirmed its Buy rating on Mapletree Logistics Trust (MLT:SP) (OTC: MAPGF) stock, maintaining the price target at SGD1.58. The trust's recent decision to sell the Mapletree Xi'an Logistics Park marks its first divestment in China since December 2019, when it sold the Mapletree Waigaoqiao Logistics Park for SGD 64 million. This previous sale was notable for achieving a 68/108% premium over its valuation and acquisition cost.
The transaction, although small, highlights MLT's continuous proactive approach to managing its portfolio. This strategy is evidenced by the sale's ability to support the trust's existing asset valuations in China by providing an exit above the asset's valuation. Additionally, the slight reduction in China AUM exposure from 18.9% to 18.8% could potentially alleviate investor concerns regarding the subdued operational performance in the region.
Following this divestment and considering other acquisitions and divestments previously announced, Citi estimates that MLT's gearing will stand at 39.1%. This level of gearing suggests that the trust has approximately SGD 0.2 billion in debt headroom before reaching the 40% threshold. The sale is seen as a strategic move that aligns with MLT's portfolio reconstitution efforts.
The endorsement from Citi signals confidence in MLT's asset management strategy and its ability to maintain robust valuations through strategic divestments. The performance of MLT's portfolio, particularly in China, and the trust's financial positioning post-divestment, remain focal points for investors monitoring the trust's ongoing developments.
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