GLP

GLP: Brazil beckons. The Changi Airport Group (CAG), will partner with Brazil conglomerate, Odebrecht to run the Galeao airport in Rio de Janeiro for 25 years. The duo offered a tender price of US$8.3b for the concession to operate Brazil’s second-busiest airport, almost four times the minimum required bid. This underscores the investor support for President Rousseff’s infrastructure development programme, as the country prepares to host the soccer World Cup in Jun next year, and the Olympic Games in 2016. GLP is one of the few SGX-listed companies positioned to ride on Brazil’s infrastructure-themed growth. Back in Nov ’12, GLP teamed up with the Canada Pension Plan Investment Board (CPPIB), China Investment Corp (CIC) and the Government of Singapore Investment Corp (GIC) to invest a total US$1.5b in two fund platforms holding about 40 logistics properties in Brazil, of which about 35 will be located in Rio de Janeiro and Sao Paolo. GLP’s Brazil portfolio size currently stands at 2.1m sqm, with pro-rata valuation of US$644m (~6% of group gross asset valuation). Investors may be hopeful that GLP can replicate the success with Brazil, that it achieved developing logistic properties in China and Japan. In particular, GLP may be inspired by its positive experience with GLP Park Beijing Capital Airport logistics facility which is fully leased, and may consider a similar concept at the Galeao airport in future, as part of its Brazil expansion plans. The presence of another S'pore partner would help greatly lubricate the investment process. GLP remains a key constituent in Market Insights’ model Growth portfolio. At $2.96, the counter trades at a 10% discount to consensus RNAV of $3.30.