Global Logistic Properties - ’Bids’ on the table
- 9M17 core net profit +25% y-o-y, above consensus.
- Met 91% of FY17F development completion target.
- On-track development starts at 71% of FY17F target.
- Maintain BUY; TP of S$3.00 (1.2x P/NAV).
Maintain BUY on higher TP of S$3.00.
- We maintain our BUY call for GLP with a revised target price of S$3.00 (vs S$2.47 previously). Our new TP is pegged to a narrower 15% discount to RNAV.
- Given ongoing corporate activity involving possible various bidders for the company, we believe that near term share price will continue to see support.
Strong 9M17 core net profit growth; development completions ahead of target.
- Core 9M17 net profit (excluding revaluation gains and one-off items) grew 25% y-o-y to S$215m, above the street’s FY17 estimate. 3Q17 fair valuation gains of +34% were mainly from China, following from an increase in development completions and cap rate compressions.
- Development completions were ahead of the FY17F target (91%) while development starts were 71% of the FY17F target.
Pegging to historical take-over premiums.
- In view of recent discussions on a potential take-over price for GLP, assuming a take-over happens, we peg to CMA’s take-over at a P/BV multiple of 1.23x – this means a fair value price could be closer to S$3/share.
- At our target price, this implies a c.39% 6-month VWAP to-date for the company.
- We maintain our BUY call with a higher target price to S$3.00 for a narrower 15% discount to RNAV. This implies 1.2x P/NAV in view of a potential corporate development on the horizon.
Key Risks to Our View
- Key risk to our view will bids that result in no takeover of the company which means that price could drop back to S$2.50- 2.60, close to 1.0x P/NAV.