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Wednesday, November 11, 2009

Why MapletreeLog fell almost 3% today?

Mapletree Logistics Trust [M44U] requested to halt its trading on Singapore Exchange on Nov 09 1353hr in anticipation of an upcoming significant announcement.

MapletreeLog announced they will launch a private placement to raise between $79 million and $82 million for acquisitions. A total of 115 million new units will be issued. The new units will be priced at between 69 cents and 71 cents each, representing a discount of 3.9 per cent to 6.6 per cent as compared to the last trading price of last Friday's. About $78 million from the private placement will go towards two yield accretive acquisitions in Singapore. The private placement is likely to reduce the stake held by MapletreeLog sponsor, Mapletree Investments, from 46.9 per cent to 44.3 per cent.

Is today's 3 per cent fall, after the trading halt was lifted, a cause for concern? According to MapletreeLog, the yield accretive acquisition will add, on a proforma basis, 0.04 cents or 0.7 per cent to the annualised distribution per unit (DPU) for the period from Jan to Sept. Accretive usually means an acquisition which is expected to increase earnings per share (EPS). MapletreeLog expects the acquisitions total returns will exceed 10 per cent. The trust's annualised distribution yield as at Nov 9 was around 8.1 per cent so far, in my opinion is a good investment.

My personal opinion is that there isn't really a need to press the panic button and sell the stock away. It is important to look beyond and have a longer investment horizon. MapletreeLog has a history of giving out high dividend yields and have performed reasonably well in financial terms. Keep cool.

In a Nov 10 press release from MapletreeLog, it says,

"In connection with the Private Placement, the Manager has announced on 9 November 2009 that, in respect of the Existing Units, a distribution of the distributable income for the period from 1 October 2009 to the day immediately prior to the date on which the New Units are issued pursuant to the Private Placement (the “Advanced Distribution”) will be made on or around 24 December 2009, to those unitholders whose securities account with The Central Depository (Pte) Limited are credited with MapletreeLog Units as at 5:00 pm on 17 November 2009."

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