MPACT Reports Steady Singapore Performance Amid Overseas Headwinds in Q3 FY24/25

Mapletree Pan Asia Commercial Trust: 3Q FY24/25 Financial Analysis – Net Profit Decline

Overview Summary

Mapletree Pan Asia Commercial Trust (MPACT) reported its 3Q FY24/25 financial results on 23 January 2025. The report highlighted a year-on-year decline in net property income (NPI) by 8.5% and gross revenue by 7.4%, primarily driven by the divestment of Mapletree Anson and overseas headwinds. Despite challenges, Singapore’s assets showed resilience, with VivoCity leading recovery efforts through asset enhancement initiatives (AEIs). Distribution per Unit (DPU) declined to 2.00 Singapore cents, a 9.1% year-on-year decrease.

Key Points with Supporting Evidence

1. Decline in Revenue and NPI

Gross revenue for 3Q FY24/25 declined by 7.4% to S\$223.7 million, while NPI dropped 8.5% to S\$166.9 million. This was attributed to the absence of contributions from Mapletree Anson after its divestment and lower overseas revenues due to currency headwinds. “The results underscore Singapore’s continued strength in fortifying the portfolio against diverging overseas currents” [[2]].

2. Asset Enhancement and Growth at VivoCity

VivoCity’s Basement 2 AEI is projected to deliver over 10% return on investment upon completion in late 2025. Despite temporary disruptions, tenant sales at VivoCity grew 14.4% quarter-on-quarter. “VivoCity’s robust performance despite impact from the ongoing Basement 2 asset enhancement initiative” [[2]].

3. Resilient Singapore Portfolio

Singapore contributed over 50% of the portfolio and achieved year-on-year growth in gross revenue on a comparable basis, excluding Mapletree Anson. “Singapore’s dominant position in the portfolio remains a fundamental pillar of long-term stability” [[3]].

4. Overseas Headwinds

Persistent strength of the Singapore dollar impacted overseas contributions, with China showing weaker occupancy levels. Festival Walk in Hong Kong, however, demonstrated recovery with a 15.6% increase in shopper traffic and 13.1% growth in tenant sales quarter-on-quarter [[4]].

5. Improved Capital Management

Net finance costs declined 9.7% year-on-year due to effective debt reduction and strategic refinancing. Aggregate leverage was stable at 38.2%, with 81.5% of debt fixed or hedged [[5]].

Analysis of Key Points

The financial report highlights a mixed performance. While the Singapore portfolio remains a key strength, overseas headwinds and currency fluctuations weigh on overall results. VivoCity’s AEI and Festival Walk’s recovery bolster optimism for long-term growth. However, the decline in gross revenue, NPI, and DPU indicates vulnerabilities that need addressing. Improved capital management reflects prudent financial practices, which may mitigate risks in a volatile environment.

Questions for Further Research

What strategies will MPACT employ to counteract overseas headwinds, particularly in China?
How will future AEI projects impact short-term financial performance?
What are the long-term plans for geographic diversification beyond Singapore?

Business Description

Mapletree Pan Asia Commercial Trust (MPACT) is a Singapore-listed real estate investment trust (REIT) with a diversified portfolio of commercial properties across five key gateway markets: Singapore, Hong Kong, China, Japan, and South Korea. The portfolio comprises 17 properties with a total lettable area of 10.5 million square feet, valued at S\$15.7 billion. Core assets include VivoCity, Festival Walk, and The Pinnacle Gangnam. MPACT focuses on office and retail properties and is managed by MPACT Management Ltd., a subsidiary of Mapletree Investments Pte Ltd, which operates globally in 13 markets.

Key Facts for Investor Action

DPU Decline: 2.00 Singapore cents in 3Q FY24/25, down 9.1% year-on-year.
Resilient Singapore Assets: Contributed over 50% of the portfolio with year-on-year growth.
VivoCity AEI: Expected to deliver over 10% ROI, with tenant sales up 14.4% quarter-on-quarter.
Capital Management: Aggregate leverage at 38.2% with improved cost of debt at 3.52%.

Financial Statement Analysis

Income Statement

Gross revenue declined 7.4% year-on-year to S\$223.7 million, with NPI down 8.5% to S\$166.9 million. These declines reflect the impact of Mapletree Anson’s divestment and weaker overseas contributions.

Balance Sheet

Aggregate leverage remained stable at 38.2%, while debt refinancing is well-distributed across years, mitigating short-term risks.

Cash Flow Statement

MPACT maintained a healthy liquidity position with S\$0.9 billion in cash and undrawn facilities, ensuring financial stability.

Recommendations

For Current Investors:

Hold the stock. While short-term performance shows declines, long-term growth prospects driven by Singapore’s portfolio and VivoCity’s AEI position MPACT for recovery.

For Potential Investors:

Wait for clearer signs of recovery. The current decline in DPU and overseas headwinds introduce risks. Monitor progress on AEIs and overseas market performance before investing.

Disclaimer

This report is for informational purposes only and should not be considered financial or investment advice. Investors should consult their financial advisors before making any investment decisions.