MPACT Earnings: Strong Singapore Assets Offset by Weak Greater China Assets and Currency Headwinds

Mapletree Pan Asia Commercial Trust’s, or MPACT’s, fourth-quarter fiscal 2024 (ending March) net property income was in line with our expectation. However, distribution per unit, or DPU, came in slightly above our expectation due to lower-than-expected borrowing cost. We lift our fiscal 2025, 2026, and 2027 DPU estimates by 2.1%, 2.6%, and 3.2%, respectively, to factor in lower borrowing cost, although this is partly offset by a stronger Singapore dollar assumption against the Japanese yen and Chinese yuan. We keep our fair value estimate of SGD 1.74 per unit as our long-term thesis remains intact. Based on current price, the trust trades at an attractive 2024 distribution yield of 7.1%. We think the trust’s assets, aside from VivoCity, continue to face near-term headwinds from the stronger Singapore dollar and unfavorable demand and supply market dynamics. However, we think these have been priced in, and the units are currently undervalued.