GLP’s 4QFY15 PATMI decreased 34.5% to US$104.9m, mostly due to increased minority interests’ share of profits following the completion of a consortium’s investment in 33.8% of GLP China, lower EBIT and higher income tax expenses over the quarter, partially offset by higher fair value gains for investment properties.

4QFY15 revenues, however, increased 6.2% to US$166.8m given the completion and stabilization of developments in China, higher rents and the inclusion of a month’s management fee from GLP US Income Partners I, partially offset by the sale of 11 properties in Japan to GLP J-REIT last year and the foreign currency losses as the yen weakened against the US dollar.

Overall, we judge core 4QFY15 results to be slightly below expectations as the group’s share of results from its Brazil JVs were weaker than anticipated; over the latest quarter, we understand the group suffered attributable fair value losses of US$26.6m from its Brazil JV investment properties due to cap rate expansions. Pending an analyst briefing later this morning, we maintain our BUY rating on GLP but put our fair value estimate of S$2.99 under review for now.

Source: OCBC Research - 14 May 2015