Wednesday, March 19, 2014
GLP: Management said in a meeting with Daiwa that GLP’s threat could come from SOEs getting together with private equity backing to form a logistics development business, and the recent US$2.5b partnership with Chinese SOEs greatly mitigates the risk. Management is also convinced that the partnership will allow GLP to expand its development starts in China by 30-40% p.a and help it to maintain its market-leading position. Daiwa’s view is that investors could see operational benefits in 6 months’ time through the increase in quarterly land acquisitions and development starts. Management also highlighted 3 positive trends: 1) Growth in third-party logistics providers (3PLs) reflecting the e-commerce boom could grow to 30-40% from the current 22% 2) Improvement in food safety and logistics infrastructure. GLP’s strategic partnership with COFCO will help establish a nationwide network of temperature-controlled warehouses 3) Growing importance of auto-parts industry to support what has been the world’s largest car market since 2009. GLP has strategic partnership with Jinbei Automotive Industries (subsidiary of Brilliance Group, SOE car-manufacturer) to develop logistics and industrial facilities in Shenyang. Daiwa maintains its Outperform rating on Midas, with TP cut to $3.12 (from $3.27), with decrease mainly reflecting changes in CNY/USD assumptions.