• 3QFY15 results in line
• US$1.7b of devt starts YTD
• To complete US acquisition in 4Q

3QFY15 results broadly within expectations

GLP reported 3QFY15 PATMI (ending Dec-14) of US$112.4m, which decreased 36.2% YoY mostly due to lower share of results of JV/associates and higher operating expenses from an increased property portfolio and business expansion, partially offset by higher fair value gains of investment properties. Excluding one-time items, pro-forma 9MFY15 PATMI is estimated to be US$192m, making up 73% of our FY15 forecast which we judge to be in line with expectations. In terms of the topline, 3QFY15 revenues inched up 0.7% to US$179.0m mainly due to the completion and stabilization of developmental projects in China with increased rents and one month’s contribution of the Brazil portfolio acquired in Jun-14, partially offset by the deferred rental revenue of Airport City Development Co, the sale of 11 properties in Japan in Mar-14 and Sep-14, and the weakening of the Yen versus the US dollar.

Operational momentum remains firm

Over 3QFY15, the group signed 600k sqm of new and expansion leases in China (up 25% YoY) and also completed US$308m of developments (up 71% YoY), of which GLP’s share is US$138m. Rents on leases being renewed in China also increased 7.3% YoY in 3QFY15. In addition, management expects to ramp up the pace of development ahead; GLP has commenced US$1.7b of new developments across China, Japan and Brazil over 9MFY15 and expects to start US$3.4b of developments in FY16, up 30% YoY. The group’s fund management platform currently comprises US$8.2b of invested capital, with a further US$4.1b of uncalled capital. Management expects to complete its acquisition of US$8.1b of logistics assets in the US in 4QFY15, of which GLP will initially take a 55% stake which will be pared down to 10% through fund syndication with capital partners by Aug-15. As at end Dec-14, the group’s balance sheet remains healthy in a net cash position with US$2.6b in cash and equivalents. Maintain BUY with an unchanged fair value estimate of S$2.99.

Source: OCBC Research - 6 Feb 2015