Asia logistics: Temasek and Daiwa hope for a bon voyage

Supply bottlenecks have propelled shares in European logistics groups such as Maersk to record heights. The phenomenon has sparked interest in Asian goods movers too. Singapore’s Mapletree and Japan’s Daiwa House just announced their own investment plans. These may pan out better long term, given the region’s stronger growth outlook.

Western media has lately been littered with stories on “the threat to Christmas”. Ports such as Long Beach, California, and Felixstowe in the UK have been gridlocked with containers stuffed with consumer goods. But backlogs start in Asia.

Products made in hubs including China and Vietnam have been held up by shortages of ships and trucks. Profits from transportation and warehousing are soaring.

That is spurring investment in a once-unfashionable sector. Mapletree Logistics Trust, backed by Singaporean state investor Temasek, will spend more than $1bn acquiring assets across China, Japan and Vietnam. Japan’s largest developer Daiwa House Industry is launching an international goods transport business in south-east Asia. Its subsidiary Daiwa House Logistics Trust plans to raise about $343m on Friday. This would be Singapore’s largest listing this year.

The read-across from Mapletree is discouraging. Its own shares have gone nowhere over the past year. Daiwa House’s stock has fallen, underperforming the 14 per cent gain in the benchmark Nikkei 225 index. It is hoping for a boost as growth in the region’s logistics and industrial sector remain strong.

Even if global supply chain disruptions normalise earlier than expected, investors have a fallback. Recent investment in logistics and manufacturing supply chains has been heavily weighted towards south-east Asian countries such as Vietnam, Thailand and Malaysia. All of these have local ecommerce markets that are far less mature than the rest of the region. Rapid growth in local demand should be expected.

Dividends are another hedge. Mapletree’s payout exceeds 4 per cent. The Daiwa House trust has a projected yield of 6.5 per cent at the IPO price. Those compare favourably with the likes of Maersk, albeit that the business lacks the same pricing power.

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