Investors in Mapletree Industrial Trust (SGX:ME8U) had a good week, as its shares rose 7.1% to close at S$2.55 following the release of its full-year results. It looks like a credible result overall – although revenues of S$406m were what the analysts expected, Mapletree Industrial Trust surprised by delivering a (statutory) profit of S$0.17 per share, an impressive 40% above what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Mapletree Industrial Trust
SGX:ME8U Past and Future Earnings May 2nd 2020
Following the recent earnings report, the consensus from 14 analysts covering Mapletree Industrial Trust is for revenues of S$390.8m in 2021, implying a discernible 3.7% decline in sales compared to the last 12 months. Statutory earnings per share are expected to crater 29% to S$0.12 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of S$399.2m and earnings per share (EPS) of S$0.13 in 2021. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
The analysts made no major changes to their price target of S$2.62, suggesting the downgrades are not expected to have a long-term impact on Mapletree Industrial Trust’svaluation. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Mapletree Industrial Trust, with the most bullish analyst valuing it at S$3.33 and the most bearish at S$2.00 per share. This shows there is still a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 3.7% revenue decline a notable change from historical growth of 4.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.3% next year. It’s pretty clear that Mapletree Industrial Trust’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Mapletree Industrial Trust. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at S$2.62, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on Mapletree Industrial Trust. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Mapletree Industrial Trust analysts – going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 6 warning signs for Mapletree Industrial Trust (1 doesn’t sit too well with us!) that you need to take into consideration.
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