GLP

GLP: In early Jul, BNP initiated coverage on GLP at BUY with TP $3.22, in view of the industry’s long-term demand needs in China and GLP’s company-specific competitive advantages. GLP’s NAV is 52.5% in China, 23.4% in Japan, 5.1% in Brazil and 19.0% in cash. In China, warehouses have become increasing attractive investments, drawing new entrants. Long-term demand for modern logistics warehouse facilities in China is set to grow due to expansion of retail and growth of e-commerce. Meanwhile, obtaining new land supply is increasingly hard due to ongoing land reforms. BNP believes GLP is a cut above the rest for three reasons: i) its market leadership position in all three markets, ii) management experience and insight, and iii) good track record. In particular, its market leadership allows it to enjoy high lease ratios of 91%, 99% and 96% in China, Japan and Brazil. The company has enviable access to land, funding and tenant base – all the factors needed to maintain its leadership. Financially the company is expected to see revenue CAGR growth >20% over FY15-17.Gearing and cost of debt are low, and the company conservatively adds new projects alongside changes in demand. Today Barclays also initiates on GLP at Overweight with TP $3.46