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Performance Of Travel Service & S-REITs Stocks: SATS; Sabana Industrial REIT; Mapletree Logistics Trust; Mapletree North Asia Commercial Trust

Companies look to be announcing better results in 1H2022.

The earnings season is upon us once again, with many companies reporting how they have performed in the first half of 2022. This is an important period of announcements as it gives us a glimpse into how many Singapore companies are coping with what has happened thus far in 2022 – high inflation, the war in Ukraine, the reopening of Singapore.

For the week of 18 July, more companies announced their financial results. In this week’s edition of 4 Stocks This Week, we explore four Singapore-listed entities that revealed their earnings to the public, and what we can learn about them.

Read Also: 4 Straits Times Index (STI) Stocks That Temasek Invests In: DBS; Singtel; SIA; ST Engineering

SATS Ltd (SGX: S58)

SATS (SGX: S58) is a provider of food solutions and gateway services solutions mainly to the aviation industry.

The food solutions segment provides in-flight catering, institutional catering, and so on. Meanwhile, the gateway services division offers ground and cargo handling, passenger and security services, and baggage handling services, among others. SATS is a dominant player at Singapore’s Changi Airport.

Currently, SATS has a presence in over 60 locations spanning 14 countries across the Asia Pacific, the Middle East, and the United Kingdom.

SATS saw improvements in its overall business for its first quarter ended 30 June 2022. Its total revenue came in at S$375.5 million for the latest period, up 36.2% year-on-year.

The increase in sales was mainly driven by a recovery in the aviation sector and the consolidation of Asia Airfreight Terminal Co. Ltd (AAT) from March this year.

More specifically, revenue from its Food Solutions business increased by 26.4% year-on-year to S$186.2 million, while revenue from Gateway Services grew 49.1% to S$189.3 million.

By industry, travel revenue grew 83.8%, while non-travel-related revenue tumbled 17.1%.

SATs Revenue

Source: SATS business update presentation

With a 50.6% increase in group expenses due to increased business activities and the consolidation of AAT, SATS went into a net loss of S$22.5 million.

Excluding government reliefs, the company would have recorded a loss of S$31.9 million for the period compared to a loss of S$35.6 million a year ago.

As for its outlook, SATS mentioned the following:

“In support of our growth on the back of aviation recovery, we have been ramping up our operations and building up our resource capacity and capabilities to meet the anticipated increased volume. We expect the recovery trajectory to continue and accelerate in the second half of this year, but inflation will remain a challenge for us to mitigate through productivity measures.”

According to the International Air Transport Association (IATA), a trade association of the world’s airlines, passenger traffic is expected to reach 83% of pre-pandemic levels, while global cargo volumes are expected to set a record high of 68.4 million tonnes in 2022. SATS should benefit from the overall recovery in the aviation sector.

Sabana Industrial REIT (SGX: M1GU)

Sabana Industrial REIT (SGX: M1GU), which was listed in 2010, is a REIT that is in line with Shari’ah investment principles.

As of 31 December 2021, Sabana Industrial REIT had a portfolio of 18 properties in Singapore.

Those properties belong to the high-tech industrial, warehouse and logistics, chemical warehouse and logistics, as well as general industrial sectors.

Sabana Industrial REIT

Source: Sabana Industrial REIT earnings presentation

For the first half of 2022, the industrial REIT posted a 14.7% year-on-year growth in its gross revenue to S$44.9 million, while net property income (NPI) stepped up 5.2% to S$27.0 million.

The strong showing was mainly due to a newly secured 10-year master lease for 30 & 32 Tuas Avenue 8, which led to an improved portfolio occupancy of 88.2%, the highest level since the third quarter of 2017.

With that, Sabana Industrial REIT’s DPU grew to 1.59 Singapore cents, up 7.4% from 1.48 cents a year ago.

Donald Han, chief executive officer of Sabana Industrial REIT’s manager, commented on the REIT’s latest results:

“…[O]ur proactive leasing efforts have resulted in sustained rental reversions. Of note, the 17.4% reversion in 2Q 2022 is the ninth positive quarterly reversion in the past ten quarters, consistently among the highest within the Singapore industrial REIT sector. It is also noteworthy that we delivered a return on investment of 5.8% for 1H 2022, with our trading price having outperformed benchmark Singapore REIT indices amidst volatile market conditions.”

Looking ahead, the REIT is embarking on its Grow VALUE strategy to hit a portfolio valuation of over S$1 billion between 2025 and 2027. As of 30 June 2022, its portfolio valuation stood at slightly below S$900 million.

Sabana Industrial REIT Strategy

Source: Sabana Industrial REIT earnings presentation

At Sabana Industrial REIT’s unit price of S$0.445, it has a price-to-book (P/B) ratio of 0.86x and a distribution yield of 5.9%.

Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust is a logistics REIT (SGX: M44U) that has 185 properties located in countries such as Singapore, Australia, China, and Vietnam.

Mapletree Logistics Geographical diversification

Source: Mapletree Logistics Trust earnings presentation

Mapletree Logistics Trust’s gross revenue for its fiscal quarter ended 30 June 2022 (1Q FY22/23) grew 14.6% year-on-year to S$187.7 million on the back of higher revenue from existing properties and contributions from accretive acquisitions completed in FY21/22 and in the latest quarter.

During the quarter, the REIT acquired two properties – Mapletree (Yuyao) Logistics Park in China and Baeksa Logistics Centre in South Korea.

With property expenses increasing by 24.8% to S$24.4 million, Mapletree Logistics Trust’s NPI for the quarter rose 13.2% year-on-year to S$163.2 million.

Meanwhile, the amount distributable to unitholders climbed 17.2% to S$108.6 million while distribution per unit (DPU) grew 5% to 2.268 Singapore cents due to a higher outstanding unit count.

Ng Kiat, chief executive of Mapletree Logistics Trust’s manager, said:

“MLT continued to deliver steady growth underpinned by stable occupancy and contributions from an enlarged portfolio. However we are mindful of the growing economic headwinds that will impact our tenants and our costs. We will remain vigilant and focused on maintaining portfolio stability while driving our portfolio rejuvenation strategy. In Singapore, the 51 Benoi Road redevelopment will add a high-specs ramp-up facility with a 2.3 times increase in gross floor area to 887,000 square feet, further strengthening our competitive position.”

At Mapletree Logistics Trust’s unit price of S$1.71, it has a P/B ratio of 1.08x and a distribution yield of 4.8%.

Mapletree North Asia Commercial Trust (SGX: RW0U)

Mapletree North Asia Commercial Trust (SGX: RW0U) owns commercial properties located in China, Hong Kong, Japan and South Korea.

Its portfolio is valued at S$8.1 billion (as of 30 June 2022) and consists of 13 properties such as:

  • Gateway Plaza (a Grade-A office building in Beijing, China),
  • Festival Walk (a retail mall with an office component in Hong Kong), and
  • Sandhill Plaza (a Grade-A business park development in Shanghai, China).

Mapletree North Asia property portfolio

Source: Mapletree North Asia Commercial Trust business update presentation

For the first quarter ended 30 June 2022 (1Q FY22/23), Mapletree North Asia Commercial Trust’s gross revenue rose 1.6% year-on-year to S$104.7 million, while its NPI grew 4.1% to S$81.5 million.

The REIT said that the growth in NPI was largely due to the full-quarter contribution from Hewlett-Packard Japan Headquarters Building, which was acquired in June 2021 and a lower quantum of rental relief granted at Festival Walk.

Festival Walk continues to be the largest contributor to Mapletree North Asia Commercial Trust’s gross revenue at over 40%.

Mapletree North Asia Commercial Trust will be merging with Mapletree Commercial Trust (SGX: N2IU) to form Mapletree Pan Asia Commercial Trust, becoming one of Asia’s ten largest REITs. Mapletree North Asia Commercial Trust is expected to be delisted on 3 August 2022 after the merger.

Mapletruee North Asia Commercial merger

Source: Mapletree North Asia Commercial Trust business update presentation

At North Asia Commercial Trust’s unit price of S$1.20, it has a P/B ratio of 0.92x and a distribution yield of 5.7%.

Read Also: 5 SREITs That Institutions Are Buying (More Than Selling) In 2022 Year-To-Date

This article was written by Sudhan P, an investment analyst who is an avid investor of businesses listed on the stock market for over a decade now and is a huge advocate of investor education.

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