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Global Logistic Properties - Phillip Securities 2016-02-05: Delivered as expected

Global Logistic Properties - Phillip Securities 2016-02-05: Delivered as expected GLOBAL LOGISTIC PROP LIMITED MC0.SI 

Global Logistic Properties Limited - Delivered as expected 

  • GLP posted its 3Q16 results before market opening on 3 February and we tuned in for an analyst conference call. 

Core operations continues to gain momentum – 

  • On the portfolio level, lease ratio maintained at 93% while new and renewal leases were up 22% in 3Q16 despite economic headwinds in portfolio’s key markets. 
  • Average same-property NOI across the board gained 6.2% YoY. 
  • Fund management fees were up 19% YoY to US$37m bolstered by higher AUM of US$32b (3Q15:$12.3b). A sum of US$516m of developments were completed in 3Q16, generating a 27% value creation margin, in line with GLP’s benchmark of 25%. 

Growing trend in outsourcing and consolidating of logistic functions – 

  • Currently, ~2/3 of GLP’s portfolio in China is leased to 3rd party logistic providers (3PL). 
  • As more companies are geared towards maintaining operating efficiency and costs, the outsourcing of logistic functions to 3PL becomes more apparent, thereby boosting the demand for logistics space. 
  • Additionally, the consolidation of smaller business entities would also boost demand for logistics space. 

Acceleration in development starts and completions – 

  • The group has met 55% and 66% of the planned development start and completion targets for FY16 respectively. The slower development progress was largely stemmed from China. 
  • Management remains confident on meeting full year development targets, citing that planned completions in 3Q16 will be rolled into the next quarter, as a result of delays in obtaining the required regulatory permits in China. 

Discussion to monetise China assets on the way – 

  • Management stated that the monetisation of China assets, involving spinning off assets into a fund is in discussion. 
  • We view this move as a positive catalyst to unlock value for shareholders, considering that China assets currently occupies the lion share (~59%) of GLP’s NAV. 

Investment Actions 

  • We remain positive on GLP’s ability to deliver as the growing domestic consumption in key markets continue to kindle the demand for logistics space, coupled with strong results in China. 
  • The possible monetisation of China assets is one of the key catalysts to look out for in the coming quarters. 
  • Overall, the results were largely in-line with our expectations, and we maintain BUY, with a slightly lower target price of $2.43 (previously $2.48) based on 1X FY16F RNAV, reflecting a higher debt position, attributable to a short-term loan that was drawn between Nov and Dec-15.



Peter Ng Phillip Securities | http://www.poems.com.sg/ 2016-02-05
Phillip Securities SGX Stock Analyst Report BUY Maintain BUY 2.43 Down 2.48


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