GLOBAL LOGISTIC PROP LIMITED
MC0.SI
Global Logistic Properties - Supported by many pillars
- Leading supplier of modern logistics warehouse space, growing fee income platform a medium ROE driver
- Leasing appetite in China still robust although incentives has risen a little
- Active take-up in Japan, continued development momentum
- Brazil’s underlying leasing momentum remains strong, US ahead of expectations
- Retain Add rating with an RNAV-backed target price of S$3.18.
■ Leading supplier of modern logistics warehouse facilities
- GLP is one of the leading global providers of modern logistics warehouse space in Asia with 4,000 tenants spread across 43m sq m of logistics facilities across China, Japan, Brazil and the US. In addition, it has 12.45m sq m of land reserves in China. Its strategy of growing its fee income platform should also boost ROE in the medium term.
■ Still robust leasing appetite in China
- China makes up 55% of group NAV at present. Demand for space remained robust with 1m sq m of new leases signed in 2QFY16 at 8.6% higher renewal rents.
- Although tenant retention declined marginally, occupancy remained at a high 89% on slightly higher rent incentives.
- We expect contributions from China to be back-end loaded as only 20% of the FY16 targeted development completions have been met at half time.
■ Active leasing in Japan, development targets on track
- Japan makes up 24% of NAV. Japan experienced a record quarter of new leases of 0.322m sq m in 2QFY16 and a 14% hike in rents upon renewal. Tenant retention was high at 78% and occupancy remained high at 99%.
- GLP is on track to meet its development starts target of US$980m, with plans to build GLP Nagareyama. This will underpin value creation, with a development margin of c.20-25%.
■ Good underlying momentum in Brazil, the US forging ahead
- Brazil and the US currently account for c.12% of NAV. Operationally, Brazil enjoys robust demand which pushes up occupancy to 95% and raises same-store rent by 6.8% yoy. However, a 65bp cap rate expansion resulted in a revaluation deficit.
- Meanwhile, US income from GLP US Income Partners I and GLP US Income Partners II will boost contribution from this geography.
■ Reiterate Add
- The longer term prospects for the modern logistics warehouse sector remains intact in GLP’s key markets, led by strong domestic consumption and the lack of modern warehouse space.
- In addition, increasing AUM would result in higher fee income and boost ROE in the longer run.
- We maintain our Add rating with an RNAV-based target price of S$3.18.
LOCK Mun Yee
CIMB Securities
|
http://research.itradecimb.com/
2015-12-09
CIMB Securities
SGX Stock
Analyst Report
3.18
Same
3.18
