GLP

GLP: CLSA downgrades to Underperform with $2.74 TP. House visited China logistics operators, tenants and developers, and are convinced the logistics sector is in early stages of long-term growth given market inefficiencies, high consumption growth, and a land-constrained environment. GLP is the unquestioned leader in China and has branched out to offer services for tenants; Goodman has become the clear #2 through development; while Prologis has taken a more measured approach. Despite house admiration for GLP, recommend Goodman over GLP due to relative valuation. Add that expected catalysts – J-Reit listing, Brazil entry – have occurred. House retain Buy on Goodman with $5.30 price target, based on DCF, forward NAV and relative PE. GMG trades at a 31% discount to global comps, but has similar cost of capital, in a domestic environment where we expect another 50bp rate cuts.