GLP

GLP: 3QFY14 results came in above estimates; net profit surged 56.3% y/y to US$176.2m from a one-off gain from tenant expense recoveries and government subsidies (+304% in other income), increased fair value gains from properties in Japan which resulted in higher associate income (+253%) and decline in finance costs (-81%) from lower FX losses and higher gains on mark-to-market values of Yen forward exchange contracts. Revenue slipped 1.5% to US$170.9m mainly due to the sale of properties to GLP J-REIT (in 4QFY13) and unfavourable FX movements (USD/JPY). This was partially offset by deferred rental revenue at Beijing Airport City Logistics Park, lease uptakes on its completed projects in China, as well as rental uplift of 9.5%. GLP has gained significant operational momentum in recent months, with strong leasing in all markets driven by robust domestic consumption. Going forward, growth would be underpinned by its substantial development pipeline of 9.7m sqm. Overall portfolio of 13.8m sqm of leasing space across 626 properties has healthy occupancy rate- China (89%), Japan (99%) and Brazil (95%). Balance sheet is healthy with cash pile of US$1.3b and net debt to assets of 11.8%, comprising 73% fixed rate and 4.5 years average debt term. NAV grew 2.3% to US$1.81/share. At $2.80, GLP still trades at an 15% discount to the consensus RNAV of $3.30. Counter remains a key constituent in Market Insights model Growth portfolio.