CGS-CIMB analyst Lock Mun Yee reiterated a Buy rating on Mapletree Commercial yesterday and set a price target of S$1.52.
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Lock Mun Yee has given his Buy rating due to a combination of factors including Mapletree Commercial’s strategic divestment of the office component of Festival Walk. This sale aligns with the company’s portfolio optimization strategy and is expected to reduce its aggregate leverage to 36.5%, enhancing financial flexibility. The proceeds from the sale are intended to pare down debt, potentially leading to net income uplift from interest cost savings over the next two years.
Additionally, Lock Mun Yee appreciates the resilience of Mapletree’s Singapore portfolio, which constitutes a significant portion of its assets. The analyst also identifies key catalysts for re-rating, such as improved performance of overseas assets and potential divestment of underperforming properties. However, he notes that risks include slower recovery of the overseas portfolio and less favorable interest rate cuts than anticipated.