-->

Global Logistic Properties - DBS Research 2016-08-15: Valuation is still attractive

Global Logistic Properties  - DBS Vickers 2016-08-15: Valuation is still attractive GLOBAL LOGISTIC PROP LIMITED MC0.SI

Global Logistic Properties - Valuation is still attractive

  • 1Q17 results impacted by fair value gains, mitigated by development profits; core results in line.
  • Development profits achieved 33% of FY17 target.
  • Slow development starts and completions. 



Bad news priced in. 

  • We maintain BUY on Global Logistics Properties (GLP) with TP of S$2.47, pegged at 30% discount to RNAV to reflect ongoing uncertainties in the operating environment. 
  • Trading at 0.8x P/BV, below the lower end of historical range, we believe the cautious outlook is priced in.


1Q17 results impacted by lower fair value gains mitigated by development profits; core results in line.

  • GLP’s 1Q17 net profit fell 24% y-o-y to US$203m, mainly led by lower revaluation gains of US$208m (-10%) and higher forex losses of US$36m and US$12m of fair value losses. 
  • Core 1Q17 net profit (excluding revaluation gains and one-off items) grew 23% y-oy to S$69m. 
  • GLP achieved 33% of its FY17 development profit target but only achieve < 20% of its development starts and completion targets. Management remains cautious on the China and Brazil markets while Japan and US continue to show strong demand.


AUM of fund management platform rose to US$36.5bn.

  • As at 1Q17, total AUM had risen to US$36.5bn, and the group has another US$12bn of uncalled capital, expected to be deployed in the next two years. 
  • Given that this business is a highly scalable and an ROE-enhancing business arm of the group, management is focusing on driving returns and operational scale by establishing new funds.


Valuation

  • We maintain our BUY call and target price of S$2.47, pegged at 30% discount to RNAV. 
  • Despite a weaker outlook, we believe the current share price, which is at 0.8x P/BV, below the lower end of historical range, is attractive.


Key Risks to Our View

  • Faster-than-expected ramp-up in competing supply on the back of a slowdown in China's retail sector would impact demand for logistics warehouses. 




Rachel Lih Rui Tan DBS Vickers | Derek Tan DBS Vickers | http://www.dbsvickers.com/ 2016-08-15
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 2.470 Same 2.470


Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......