Global Logistic Properties - DBS Research 2017-05-17: ‘Bids’ Closing Soon…

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GLOBAL LOGISTIC PROP LIMITED MC0.SI

Global Logistic Properties - ‘Bids’ Closing Soon…

• According to latest media reports, bidding process could close soon.
• Limited upside to target price after share price rerated further to above S$2.90.
• Only 11% upside at the higher-end of historical takeover premiums.
• Downgrade to HOLD rating.

Downgrade to HOLD; TP of S$3.00. 

• We downgrade GLP to HOLD given the limited upside to our current target price of S$3.00.
• Despite the ongoing corporate activity possibly involving various bidders for the company, we believe its current share price at close to 1.2x P/NAV which in our view is fair when compared to former transaction multiples.

Where we differ. 

Limited upside to fair value pegged to historical takeover premiums. 

• We have a street high target price of S$3/share. In view that the bidding process could close soon as reported in the latest news and assuming a takeover happens, we believe GLP's share price which has rallied to above S$2.90 is close to our estimate of its fair value price of S$3.00 based on CMA’s takeover at a P/BV multiple of 1.2x. 
• At our target/fair value price, this implies a c.36% 12-month VWAP todate for the company (which includes 6-month VWAP before the announcement of a strategic review). 
• At the higher end of the historical takeover premiums of 1.32x, the fair value price could be at a high of S$3.23, implying only a 11% upside.

Potential catalyst. 

• Bids are more competitive than expected/revaluation of assets at end-FY17.
• What could derail our thesis? Scenarios that could derail our thesis include 
  1. partial disposal of the assets instead of a full takeover, 
  2. further delays in the process, and 
  3. higher-than-expected revaluation of the assets from potential completion of developments.

Valuation

• Our target price of S$3.00 is based on 15% discount to RNAV.
• This implies 1.2x P/NAV in view of a potential corporate development on the horizon.

Key Risks to Our View

• Key risks to our view are bids that do not result in a takeover of the company, which means that its share price could drop back to S$2.50-2.60, close to 1.0x P/NAV.

Rachel Tan DBS Vickers | Derek Tan DBS Vickers | http://www.dbsvickers.com/ 2017-05-17

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