GLOBAL LOGISTIC PROP LIMITED
MC0.SI
Global Logistic Properties - Lifted by China and fund management
- China and one-off gains lifted bottomline.
- Leasing incentives high in China, with demand coming from domestic consumption.
- Japan and US enjoyed healthy rental growth amid low vacancies and tight supply.
- Building up land resource access through JV with CMSTD.
- Maintain Add with a lower target price of S$2.74.
■ Boosted by China and one-off gains
- GLP’s 3QFY16 topline rose 11% to US$198.9m thanks to higher contributions from China, development gains in Japan and higher management fee income.
- Bottomline surged 64% to US$184.2m, thanks to higher revaluation gains, largely from China on a 25bp cap rate compression in selected cities, as well as inclusion of a US$48m syndication gain on USIP I and 90% of USIP II pre-syndication earnings.
- Excluding revals, bottomline would have been US$83m, largely in line with expectations.
■ Leasing appetite robust but incentives remain high
- GLP signed 2.4m sqm of new and renewal leases, +22% yoy, with a 69% customer retention rate and maintained lease ratio at 93%.
- In China, c1.4m sqm were signed, keeping lease ratio at 88%.
- Demand came from retail, e-commerce, auto parts, pharma and healthcare industries. However, effective rent growth was lower (2.5%) as incentives remain high.
- To date, GLP has completed 63% of its targeted development starts and 40% of its completions, and it expects to achieve its FY16 targets.
■ Good demand, tight supply underpin Japan and US performance
- In Japan, it continued to see strong demand, keeping lease ratio at 99% and effective rent growth at 5.4%.
- With 93% of its scheduled completions achieved, it is on track to deliver its FY16 objectives.
- With its Japan development fund largely deployed, it is looking at potentially setting up a second fund there.
- US enjoyed strong effective rent growth of 19.4%, with portfolio occupancy inching up to 95% as supply remains tight.
■ JV with CMSTD provides more land resources
- GLP remains focused on creating value through its development and leasing activities, as well as build a fee income platform.
- It has recently completed the acquisition of a stake in CMSTD and has set up a JV to gain access to the latter’s land resources of > 9m sqm.
- With a net gearing of only 18.2%, it is well placed to fund its development activities.
- Furthermore, it could potentially look at unlocking value from its completed China portfolio to recycle capital.
■ Maintain Add
- While there are near-term headwinds due to the slower China macro outlook, we believe the longer term prospects of the modern logistics warehouse sector remain intact in GLP’s key markets, led by strong consumption and urbanisation.
- Growing AUM would result in higher fee income and boost ROEs in the longer run.
- We maintain our Add call but lower our EPS and RNAV-backed target price by 14% to S$2.74 as we assume slower development growth over the next two years.
- GLP is trading at an attractive 0.63x P/BV.
LOCK Mun Yee
CIMB Securities
|
YEO Zhi Bin
CIMB Securities
|
http://research.itradecimb.com/
2016-02-05
CIMB Securities
SGX Stock
Analyst Report
2.74
Down
3.18
