GLP

GLP: 1QFY14 net profit of US$204m (+33.3% y/y) reached 65% of FY14 estimate, mainly boosted by gains of US$135m (1QFY13: US$44.8m) from revaluation of its Japanese assets. Stripping out one-time gains, pretax profit fell 18% to $109.7m, in tandem with the 20% drop in revenue to US$137.2m due to the sale of 33 properties to GLP J-REIT in Nov 12, depreciation of JPY and lease cancellation by a tenant in Japan. Revenue from China surged 40% to US$78.9m (58% from 33% share in 1QFY13), driven development completions and rental growth. Balance sheet remained sturdy with leverage of 9.2%, average debt maturity of 4.9 years and NAV of US$1.79. Rents and lease ratios remained stable across the portfolio, with rental growth outlook intact. Development starts in China beat expectations at 0.73m sqm vs FY target of 2.5m sqm. With US$1.79b cash pile and 9.2% net debt/asset, GLP has the flexibility to finance capex. Japan cap rates compressed 13 bp to 5.2%, which saw NAV broadly remaining flat at US$2.5b despite JPY depreciation. GLP continues to add to its landbank with the acquisition of 0.58m sqm in China. Land reserves stands at 11.9m sqm, underpinning future growth. The market may view results as a "miss" but CS expect earnings to be back-loaded with more completions and increased leasing demand which has picked up in the last six weeks. CS continue to like GLP due to its logistics exposure (defensive), with a growth kicker from its development completions. Nomura maintains NEUTRAL with TP $2.70; CS maintain OUTPERFORM with TP $3.15;