Global Logistics Properties

CIMB Research, June 23

WE maintain our Add call on GLP given its asset-recycling pipeline and visible growth from China. We cut our FY15-17 EPS by 4-22 per cent and RNAV by 5.6 per cent as we estimate that a greater proportion of partnerships in China will reduce GLP's attributable earnings and factor in US$500 million to US$600 million of annual injection for stabilised Japan assets.

We acknowledge the risks of higher competition among logistics facilities and land supply constraints but do not expect them to undermine GLP's market leader position. The combined spending on logistics facilities by GLP,

The land supply constraints are mitigated by the strategic partners, such as SOEs, COFCO and Sinotrans, which are not only likely to increase land supply but leasing demand as well. We believe GLP will maintain its market leader position in China through the fostering of strategic partnerships and enhancing customer stickiness.

We expect GLP's AUM to post a CAGR of 28 per cent over FY15-17 through the injection of stabilised assets into funds/Reits and the investment of committed capital from its development funds. This will be a positive as it not only builds its management fee platform but also enables capital to be recycled into its growing China portfolio.

GLP is trading at a 19 per cent discount to RNAV, about one standard deviation deeper than its historical mean discount of 12 per cent. Additionally, we expect GLP's RNAV to grow 9 per cent and 2 per cent in FY16 and FY17, respectively, driven by growth in its China assets and value creation from an enlarged fund management portfolio.

ADD