Monday, April 28, 2014
GLP: UBS maintains Buy with TP $3.23 TP. The house notes that following the 24th Apr EGM where GLP obtained an affirmative 95.37% of votes in favour of the landmark agreement in China, management released an update on its Q4FY14 operating metrics. Results were impressive. GLP secured 1m sqm of new and expansion leases in Q4, a record. The impact on the stabilised portfolio was visible with occupancy rising 2ppt to 91% on higher rents. 71% of leasing demand was derived from existing customers and suggests stronger momentum ahead as new relationships introduced by the China partners have yet to contribute. E-commerce tenants underpinned demand and now comprise 25% of China leased area. With growing consumption and emphasis on food safety, we think demand from the cold chain logistics will also become increasingly significant. Statistics show China is one of the world’s fastest-growing markets for perishable foods but its per capita refrigerated warehouse space is still significantly less than most developed countries. GLP is currently collaborating with COFCO to develop a nationwide network of facilities and the house believe there will be more developments on that front.