Global Logistics Prop

Global Logistics Prop: Seemingly robust 4QFY13 earnings of US$224.0m, an increase of 43.1% y/y, driven by a higher contribution from jointly-controlled entities and a net fair value gain of US$71.2m (of which US$69.2m came from its China properties). Finance income of US$12.2m was recorded due to foreign exchange gains from its forward contracts, as well as mark-to-market gains on outstanding contracts. Excluding these one-off gains, 4QFY13 earnings declined 10.2% to US$140.6m. Full year earnings increased 26.5% to US$684.3m. 4QFY13 revenues declined by 18.4% to US$125.1m, mainly due to the sale of 33 properties in Japan to its subsidiary GLP J-REIT in Jan and Feb 2013, as well as a 15% depreciation of the Japanese Yen against the US dollar.This was partially offset by the inclusion of asset and property management fee income from GLP J-REIT, completion of development projects in China with increasing rents, contribution from newly acquired subsidiaries in China, as well as asset management and development fee income from joint ventures in Japan. Full year revenues increased 13.5% to US$642.1m. For FY13, GLP initiated new developments of 22.6m sf in China, and has earmarked an increase of 19.5% (27m sf) in new developments for FY14 at a cost of US$1.2b. Land purchases in China of 45.2m sf increased a significant 213% in FY13, bringing its total land reserve to 113m sf, which provides a strong pipeline for future development. GLP's portfolio in Japan is stable, encompassing 84 completed properties with gfa of 38.8m sf. Lease ratio is stable at 99%, with high tenant retention rate of 80%. Rents are stable at JPY100.6 psf/month. Development starts in Japan of 5m sf was ahead of the group's target, and GLP expects to begin development of approximately 4.3m sf for FY14, with development cost of US$670m. In Brazil, its 100% leased properties has a long weighted average lease expiry of more than eight years. GLP started developments of 1.1m sf in 4QFY13, and targets to initiate 3.3m sf in FY14 at a cost of US$290m. GLP will continue to benefit from the growth of domestic consumption in its key markets, particularly in China and Brazil, while Japan undergoes a reconfiguration of its supply chain towards modern logistics facilities. 84% of its overall portfolio is leased to domestic consumption related customers, as well as a robust demand from 3PL providers and retailers, including e-commerce. GLP recommended a dividend of 4¢ per share, implying a FY13 dividend yield of 1.5%. At its last closing price of $2.86, GLP trades at 1.3x P/B. Broker recommendations: CS maintains OUTPERFORM with TP of $3.15; Nomura remains NEUTRAL with TP of $2.70;