Mapletree's Q3 Fiscal 2023 In Line; Currency and Interest Rate Headwinds Continue to Drag on Its DPU

Mapletree Logistics Trust's third-quarter fiscal 2023 (ending March) revenue and net property income, or NPI, declined for a second consecutive quarter due to currency headwinds and higher borrowing cost driven by rising interest rates. As a result, revenue and NPI declined 2% and 1.8% quarter on quarter, respectively, while third-quarter fiscal 2023 distribution per unit, or DPU, fell 0.9% quarter on quarter to SGD 2.227 cents. Management expects the currency headwind to persist for another three quarters and cost of borrowing to rise by another 40 basis points by fiscal 2024. We are not surprised by this set of results as we flagged our concerns earlier that the strong Singapore dollar and rising interest rates will erode the firm’s DPU growth in the near term. Hence, we maintain no-moat Mapletree’s fair value estimate at SGD 1.66. In our view, the trust is fairly valued presently, and we encourage investors to wait for a better entry point.