Company Name: GLOBAL LOGISTIC PROP LIMITED
| Research House: CIMB | Price Call: HOLD | Target Price: 2.69 |
Global Logistic Properties is a step closer to going global with its plan to enter Brazil through two JV funds, CIMB says; “taken with its planned J-REIT, assets under management looks set to balloon − a strong positive − though the deal comes with higher risk premiums and equity fund raising.”
It says the deal’s attractions are the AUM platform scaling up further and net property income upside with GLP projecting leveraged IRRs of 18%-19%. “However, investors may find it hard to swallow the high risk premiums associated with this deal and possible distraction from its China plans. GLP also intends to fund its initial equity contribution through share placements, which could further pressurise its share price.”
It notes 1H13 core EPS forms 52% of its FY13 estimate; it raises its FY13-15 core EPS forecasts by 8%-12% for the Brazilian deal, but notes NPI could plunge once its J-REIT is established. It estimates the J-REIT listing could add 12-14 cents/share to RNAV. It raises its RNAV-based target to $2.69 from $2.55, but keeps a Neutral call on limited upside from the Brazilian and J-REIT initiatives. The stock is down 4.4% at $2.60.
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