Global Logistic Properties Ltd - OCBC Investment 2017-08-10: Showing Steady Growth

GLOBAL LOGISTIC PROP LIMITED MC0.SI

Global Logistic Properties Ltd - Showing Steady Growth

GLP's 1QFY18 PATMI declined 29% YoY to US$144.2m mainly due to lower revaluations over the quarter.
On a core basis (excluding revaluations), earnings for the quarter grew 3% YoY to c.US$71m, underpinned by recurring income from operations and the continued expansion of the management platform. This constitutes 21% of our full year forecast and we deem this quarter’s numbers to be broadly within expectations.
In terms of the topline, 1QFY18 revenues increased 27% YoY to US$261.8m mainly from higher contributions from financial services in China, completion and stabilization of Chinese development projects with stronger rentals, and management fee income from the fund management platform.

Average lease ratio declined marginally QoQ by 1% to 90%. New and renewal leases also increased 35% YoY to 3.3m sqm with c.72% of customers renewing their leases.
Over the latest quarter, GLP also saw healthy rental growth with a 5.2% increase in same property NOI and 7.7% growth on renewal leases.
In terms of new development starts and completion targets, the group achieved 11% and 15% of its annual targets of US$2.2b and US$1.7b, respectively; GLP’s development run rate is typically lower in the first quarter due to seasonality and is likely to pick up in 2HFY18.

The ongoing scheme of arrangement for the proposed privatization of GLP at S$3.38 per share will not be reduced by the FY17 dividend of S$0.06 per share (to be paid on 22 Aug 2017) and the exercise is expected to be completed by 14 Apr 2018.
Note that GIC, as the single largest shareholder with a 36.84% stake, has provided an irrevocable undertaking to vote in favour of the scheme.
Given that the offer price is above our fair value estimate of S$2.87, we recommend for shareholders to ACCEPT THE OFFER.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2017-08-10

OCBC Investment SGX Stock Analyst Report ACCEPT OFFER Maintain HOLD 2.870 Same 2.870