GLP

GLP registered 2QFY14 net profit of US$145.0m (-26%) and revenue at US$139.8m, as bottom-line was buoyed by a US$107.0m change in fairvalue gains, barring which the results was largely in line with estimates. The decrease in revenue was mainly attributable to the sale of properties in Japan to GLP J-REIT in 4QFY13, the weakening of the Japanese Yen against USD, with average exchange rates decreasing by 26%. The decrease was partially offset by the completion and stabilization of development projects in China with increasing rents, contribution from newly acquired subsidiaries. Rental revenue from China warehouses rose 39% y/y in 2Q14, underpinned by a 6.9% increase in renewal rents. This drove overall revenues up 15% yoy in 1H14, excluding the effect of recent divestments in Japan and exchange rate movements. Same-store NOI growth moderated but stayed a respectable 7.8% yoy. The key positive from this set of results was the strong leasing in China, up 60% yoy and 2.8x qoq to 575k sm. 1H14 new leases of 775k sm are keeping pace with the 1.1m sm of development starts in the period. GLP is confident of meeting its 2.5m sm development starts target for FY14. Occupancy in Japan remains stable at 99%, with renewal rents up 3% yoy, the highest rate seen in years. Japan still accounts for 29% of its GAV. Overall, GLP’s results showed robust leasing demand in China. But the key event was the close of a US$3bn China Logistics Fund (CLF1), which will help it to scale up substantially in a capital-efficient manner, accelerate its fee income growth and maintain its leadership in the China logistics property space Latest broker ratings as follows: CIMB maintains O/p with TP $3.43 CLSA maintains O/p with TP $3.45