GLP

GLP: Plenty of corporate devts over the recent days. i) Purchase of Brazil assets GLP will team up with GIC, Canada Pension Plan Invmt Board and China Invmt Corp to buy assets in Brazil for 2.9b real (US$1.4b). GLP will act as the asset mgr of the 40 acq properties, 88% of which will be located in Sao Paulo and Rio de Janeiro. GLP is expanding its assets to profit from rising consumption and affluence in Brazil that is leading to increased demand for distribution facilities. With the acq in Brazil, GLP’s assets will almost triple to US$7.2b. To fund the initial equity commitment of the acq, GLP will place 160m new shares (~3.5% of existing shares out) at $2.59/sh, which translates to a 4.8% discount to yday’s close. The placement agreement is with Citi, Goldman, JPM and CICC. ii) Listing of J-Reit GLP has made a regulatory filing in Japan to list a J-Reit on 21 Dec. GLP plans to sell 1.75m shares; it will set the IPO price range on 3 Dec, and the final IPO price on 12 Dec. 8 cos. incl Nomura will handle domestic share sale, while 7 cos. incl Goldman Sachs to handle overseas share sale. GLP said yday it is raising ~¥104.8b from the IPO and will retain an interest of ~15% in the J-Reit, vs an earlier statement on 1 Nov. Then, GLP intended to raise ¥209b from selling 30 of its 68 Japanese logistic facilities to a REIT that it will partly own and manage. The REIT will be able to buy an additional three properties over the next three years, and will be granted a “right of first look” over the remaining 38 properties for a period of 10 years. iii) 2QFYMar13 results, above expectations. Sales rose 25% yoy to US$172.9 m, mainly due to the completion and stabilization of devt projects in China, contribution from Transfar Logistics Base which was acq in Dec ’11, asset mgt and devt fee income from JVs in Japan, as well as improving rental rates in China. Net profit declined 3.1% yoy to US$194.5m, but came in Bloomberg consensus at US$109m. The reduced bottom line was bcs, i) share of results of jointly controlled entities decreased by 58% yoy to US$34.5m, due to lower fair value gains which offset better operating results, and ii) finance costs of US$9.7m vs finance income of US$9.5m yoy, due to reduced forex gain recorded on Yen denominated monetary assets. In China, mgt sees solid demand from various customer segments, such as 3rd party logistics companies and online retailers, and notes demand from domestic companies accounts for an increasing proportion of its business. In Japan, the group continues to experience solid customer demand with occupancy running at 98%. At $2.72 at last close, the stock trades at 15.5x P/E, 1.25x P/B. Religare keeps at Neutral but upgrades TP to $2.61 from $2.46 as it rolls over RNAV to end FY13, and incorporates Brazil invmts, recent invmt/ divestments and share placements. Daiwa cuts to Hold with TP $2.70.