STI : 3,167.43
Price Target : S$ 3.31
In a sweet spot
• Good proxy to China’s medium term growth prospects
• Broadening expansion track with China logistics fund
• Maintain Buy with TP of S$3.31
Strong proxy to China’s growth from recent reforms. GLP offers exposure to the long term growth prospects in China with 54% of its gross asset value exposed to the country, spread over an attributable 12.9m sm of GFA. In addition, it has another 11.8m sm of land reserves, providing a strong pipeline for future developments.
Expansion on track. GLP is en-route to delivering strong portfolio expansion as its operating environment remains robust with strong take up in China and positive rental reversions in Japan. The group is on track to achieve up to 2.5m sm of development starts for the year, which will underpin NAV expansion. Meanwhile, the establishment of a 3-year US$3bn China Logistics Fund I, in which GLP has retained a 56% stake, alleviates the need for large development capex while delivering another platform to tap the under-served modern logistics real estate market. The fund is expected to undertake development projects that are < 75% completed. In addition, GLP can also evaluate and commit to JVs and other projects that do not fall into this guideline, thus enabling the group to expand its scope of focus.
Retain Buy call. We maintain our Buy call with a TP of S$3.31. There could be potential upside risk to our valuation should GLP be able to undertake new activities outside of the development fund, which will fast track its growth in China. We continue to like GLP for its leadership position in the Asian modern logistics warehouse market.
Publish date: 03/01/13