Company Name: GLOBAL LOGISTIC PROP LIMITED
| Research House: DBS Vickers | Price Call: BUY | Target Price: 2.61 |
Global Logistic Properties’ proposed J-REIT will offer the company a differentiated strategy, with a yield-driven J-REIT focusing on mature and stabilised assets, while GLP will focus on potential NAV and earnings enhancement by investing in development and properties with asset-enhancement possibilities, DBS Vickers says.
“GLP would generate recurrent income as the property and asset manager of the J-REIT,” it adds. The estimated Y100 billion ($1.5 billion) net cash proceeds will enable GLP to recycle capital while growing its recurrent fee income platform and receive its share of recurrent dividend income, it says.
“In terms of potential earnings impact, the sale of the initial assets would mean income vacuum in the near term, partially offset by fee and dividend income.” The net profit before tax of the J-REIT’s initial portfolio is around US$102 million ($124.5 million), or 23.1% of GLP’s fiscal-FY12 pre-tax profit, it says. But the house expects reinvestment of the proceeds could boost RNAV by $0.20/share. It keeps a Buy call, putting its $2.61 target under review. The stock is up 1.9% at $2.71.
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