GLP

GLP: 3QFY15 results in line;
GLP 3QFY15 headline net profit lowered 36.2% y/y to US$112.4m, mainly due to earnings dilution from a reduced 66.2% stake in GLP China following the completion of the first tranche (24.4%) and second tranche (9.4%) of investment by a Chinese consortium.

Adjusting for the GLP China investment, revaluation gains and FX effects, proforma core net profit was in line with street estimates at US$65.9m (-14.7%), due mainly to lower share of results of jointly-controlled entities from lower fair value gains and higher staff and business expenses from expansion.

Revenue remained flat at US$179m (+0.7%), as completion of development projects and higher rents (+7%) in China was offset by the absence of deferred rental revenue, contribution from 11 properties sold to GLP J-REIT, as well as the weakening Yen against USD, which translated to a 10% drop in average rates.

Balance sheet remains solid with cash pile of US$2.2b and net cash position, placing the group in good position to capitalize on its growth opportunities.

Development and leasing momentum in China remains strong, with 630k sqm completions and 600k sqm leased (+25%), with demand driven by third-party logistics and FMCG customers.

As at 3QFY15, GLP's overall portfolio boasts 17.1m sqm of completed properties in China (10.7m), Japan (4m) and Brazil (2.4m). Occupancy remains healthy with 89% in China, 99% in Japan and 98% in Brazil.

At $2.48, GLP trades at 1x P/B and 25% discount to consensus RNAV of $3.30.

We continue to like GLP as a key beneficiary of the structural uptrend in China logistics, backed by an e-commerce boom. The counter remains a key constituent in Market Insight’s model Growth portfolio.