Global Logistic Properties Ltd - OCBC Investment 2017-08-10: Showing Steady Growth

Global Logistic Properties Ltd - OCBC Investment 2017-08-10: Showing Steady Growth GLOBAL LOGISTIC PROP LIMITED MC0.SI

Global Logistic Properties Ltd - Showing Steady Growth

  • 1QFY18 numbers broadly in line.
  • Lease ratio dips 1% QoQ to 90%.
  • Scheme to complete Apr 2018.

Core 1QFY18 earnings up 3% YoY 

  • GLP's 1QFY18 PATMI declined 29% YoY to US$144.2m mainly due to lower revaluations over the quarter. 
  • On a core basis (excluding revaluations), earnings for the quarter grew 3% YoY to c.US$71m, underpinned by recurring income from operations and the continued expansion of the management platform. This constitutes 21% of our full year forecast and we deem this quarter’s numbers to be broadly within expectations. 
  • In terms of the topline, 1QFY18 revenues increased 27% YoY to US$261.8m mainly from higher contributions from financial services in China, completion and stabilization of Chinese development projects with stronger rentals, and management fee income from the fund management platform.

Same-property NOI and renewal leases up 5.2% and 7.7% respectively 

  • Average lease ratio declined marginally QoQ by 1% to 90%. New and renewal leases also increased 35% YoY to 3.3m sqm with c.72% of customers renewing their leases. 
  • Over the latest quarter, GLP also saw healthy rental growth with a 5.2% increase in same property NOI and 7.7% growth on renewal leases. 
  • In terms of new development starts and completion targets, the group achieved 11% and 15% of its annual targets of US$2.2b and US$1.7b, respectively; GLP’s development run rate is typically lower in the first quarter due to seasonality and is likely to pick up in 2HFY18.

Recommend that shareholders ACCEPT THE OFFER 

  • The ongoing scheme of arrangement for the proposed privatization of GLP at S$3.38 per share will not be reduced by the FY17 dividend of S$0.06 per share (to be paid on 22 Aug 2017) and the exercise is expected to be completed by 14 Apr 2018. 
  • Note that GIC, as the single largest shareholder with a 36.84% stake, has provided an irrevocable undertaking to vote in favour of the scheme. 
  • Given that the offer price is above our fair value estimate of S$2.87, we recommend for shareholders to ACCEPT THE OFFER.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2017-08-10
OCBC Investment SGX Stock Analyst Report ACCEPT OFFER Maintain HOLD 2.870 Same 2.870