• FY2017 results in line
• Healthy operational performances
• Maintain HOLD with S$2.87 FV

4QFY17 PATMI Up 62% Due to Higher Asset Values

GLP’s 4QFY17 PATMI increased 62% YoY to US$247.1m mainly due to higher asset values as we saw portfolio cap rates compress over the quarter in Japan, US and Brazil. On a core basis, however, after adjusting for non-recurring items, 4QFY17 earnings fell 5% YoY mainly due to lower contributions from the group’s second US portfolio after its syndication in 2QFY17. As a result, FY2017 PATMI now cumulates to US$793.7m, up 10.4% YoY.

In terms of the topline, 4QFY17 revenues increased 14.0% to S$226.9m mostly due to rent growth and leaseup after the completion and stabilization of Chinese development projects, financial services income from China and higher fund management fee income. Overall we judge this quarter’s number to be broadly in line with expectations. An ordinary dividend of 6.0 S-cents per share has been proposed.

FY2018 Targets: US$2.2b New Developments Starts and US$1.7b Completions

Management reports continued customer demand for its logistic facilities globally, with the group’s average lease ratio at a healthy 91% as at end Mar 2017 (albeit down 1% QoQ due to some weakness in China), and group new and renewal leases up 35% YoY to 13.3m sqm, 6.3% growth in same-property NOI and 8.9% rent growth in renewal leases.

In FY2017, the group also exceeded its development targets, starting US$2.2b in developments and completing US$1.6b in projects. The group plans to start US$2.2b of new developments and complete US$1.7b of developments in FY2018. In addition, GLP’s fund management revenues increased 21% YoY to US181m with total AUM up 11% YoY to US$39b as at end Mar 2017.

Remains in Discussions With Several Parties for Independent Strategic Review

Regarding the ongoing strategic review, GLP reports that it remains in discussion with several shortlisted parties following its evaluation of nonbinding proposals received and the due diligence process is ongoing. Management reiterates that there is no assurance that any transaction will materialize from the review. Maintain HOLD with an unchanged fair value estimate of S$2.87.

Source: OCBC Research - 19 May 2017