Global Logistic Prop Limited: Results on track

- 3Q topline grew 12.9% yoy, in line.
- Demand in China remains robust from existing
tenants, while Japan portfolio continues to benefit
from stronger Yen
- Accretive activities and organic growth to boost
valuation and earnings
- Maintain Buy with SOTP TP of S$2.76

Comment on Results
In line with expectations. GLP's Q3 topline of US$125.2m (+12.9% yoy) was inline with our expectations. Besides better portfolio performance, the group also benefited from revaluation gains of US$162m & US$131m from the Japan and China portfolio respectively. Stripping off these gains, EBIT and PATMI including associates and JV's income would have been US$95.7m, (+36.5% yoy) and US$73.4m (+75.7% yoy), respectively.

China properties performance remained robust China portfolio saw a 39% yoy growth in operating revenue in RMB terms, supported by the completion and stabilization of another 0.1 msm of new space in the quarter. Performance wise, the group saw an average 0.103msm/mth of new demand and expansion from its existing tenants lifting its lease ratio from 91% to 92%. Japan operations, the cash cow In JPY terms, Japan portfolio topline remained stable (+1.0% yoy) but saw a larger gain (+9.0%yoy) due to an 8.1% appreciation in the Yen/USD exchange rate. In tandem with the improving outlook for industrial properties, occupancy remained resilient with a high take up rate of 99% and WALE of 6.2 yrs.

Recommendation
Maintain BUY with a target price of S$2.76 The group's China development pipeline remains robust at 0.9msm and on track to meet their 1.2msm target for 2011, and will underpin earnings going forward. Furthermore, its low debt to equity ratio of about 33% will enable the group to make opportunistic acquisitions. Our TP of S$2.76 is pegged at parity to valuation and offers 43% upside.

Source