Global Logistics Properties

Global Logistics Properties: Reported a strong set of 2Q results in-line with expectations. Rev was at US$113.3m, +13.5%YoY and flat QoQ, while Net Profit at US$85.4m, +216.6% YoY. Excluding revaluation gains (+US$11.6m), Net Profit was at US$74.2m, +98.4%YoY...

Continued strong top line rev attributed to completion and stabilization of grps development projects in China and strengthening of Yen against the USD. Growth continued to come from grp’s Chinese segment, which saw Rev surged 40% YoY to US$39m for 1H11, while Japanese portfolio rev increased 10% to 185m. Demand for facilities remained strong with Japanese facilities seeing a lease ratio of 99%, while China at 91%....

Result places 1H11 Net Profit at US$573.4m (inclusive of a revaluation gain of US$427.6 million), vs loss of US$1.8mYoY, while Rev +14.3%YoY at US$224m, placing grp on track to meet FY11 Net Profit consensus estimates of US$672m...

Going forwards, grp remains positive on outlook and will pursue development and acquisition opportunities in the region and continue to build its portfolio of modern logistics facilities in China and Japan for long-term growth….

Grp has increased its China’s warehouse space by 20% in last six mths, bringing its China portfolio to 3.5m sqm of completed gross floor area. Including land held for future development and properties under development, grp’s China portfolio stands at 6.6 million sqm. Still grp says it has less than 1% market share, which it calls a fragmented market.

We note that at current levels, grp trades at undemanding valuations of 1.3x P/B, vs CMA of 1.45xP/B and Hang Lung Properties of 1.7x, while net gearing remained low at a comfortable 25.6% with majority of debt expiring 2013 and beyond. Citi, DBSV (TP $2.76) & JP Morgan (TP $2.90) maintains Buy Call. Near term resistance at last week's of $2.29, followed by post-listing high of $2.33.