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Five Facts Global Logistic Properties’ Investors Need To Know

GLP

Global Logistic Properties (SGX: MC0) is a provider of modern logistics facilities and is relatively young as a public-company.

It was listed on 18 Oct 2010 at a price of S$1.96 and over the past three years, its shares have done very well, gaining 47% to S$2.89. The Straits Times Index (SGX: ^STI) has declined by 1% in the same time.

As a part of the STI’s 30 constituents, it is likely that GLP has received attention from some investors. But as it is not as consumer-facing as, say, SingTel (SGX: Z74) or StarHub (SGX: CC3), there is a possibility that some may not be familiar with it.

If you are part of that group, GLP’s latest presentation slides for investor meetings might help.

Here are some important facts from the presentation:

1) GLP’s international presence

Despite the company’s Singapore listing, most of its business is actually conducted in three countries: China, Japan, and Brazil.

China
  •   In 37 cities, with 122 GLP parks and 451   completed properties
  •   7.9 million square metres (mm sq. m.) of   completed gross floor area (GFA), and 7.7 mm sq. m of development in the   pipelines
  •   Land reserves of 11.9 mm sq. m
  •   Total valuation of portfolio: US$7.16b
  •   Weighted Average Lease Expiry (WALE) of 3   years for its logistic properties
Japan
  •   In 7 cities, with 84 completed properties
  •   3.7 mm sq. m of completed GFA (84% of   completed GFA located in the cities of Tokyo and Osaka), and 0.3 mm sq. m of   development in the pipelines
  •   Total valuation of portfolio: US$7.44b
  •   WALE of 5.3 years
Brazil
  •   43 completed properties
  •   1.0mm sq. m of completed GFA and 0.8mm sq. m   of development in the works
  •   Total valuation of portfolio: US$1.79b
  •   WALE of 8 years
**Data as of 30 June 2013

Source: GLP’s Presentation Slides for the Oct 2013 Investor & Analyst Meeting

2) GLP’s track record

Since GLP is a provider of logistics facilities, one way to track its progress would be to look at the gross floor area of its completed properties. Here’s a chart showing you just that:

glpFloorArea

Source: GLP’s Presentation Slides for the Oct 2013 Investor & Analyst Meeting

3) Fund management as an additional avenue of growth

While the bulk of GLP’s business still comes from customers leasing its logistics facilities, it is actually building out its fund management platform. There are currently five funds with a total of US$8.4b in assets under management (AUM) that GLP is involved with.

These funds are: GLP Japan Development Venture; GLP Japan Income Partners I; GLP Brazil Income Partners I; GLP Brazil development Partners I; and GLP J-REIT.

The chart below showcases the AUMs in each fund in addition to GLP’s stake in them:

GLPAUM

Source: GLP’s Presentation Slides for the Oct 2013 Investor & Analyst Meeting

4) GLP’s unique value proposition as a provider of modern logistics facility

Old-fashioned logistics facilities often have restricted accessibility for vehicles; insufficient height; narrow column spacing within the warehousing area; and a lack of loading docks and office space.

In contrast, modern ones carry features such as large floor areas; high ceilings; high load tolerances; elevators with large capacities; wide column spacing within the warehousing area; modern loading docks; and enhanced safety systems.

GLP’s three international markets – China, Japan, and Brazil – all face a dearth in supply of modern facilities. In China and Brazil, about 20% of the supply of logistics facilities can be considered modern while the percentage is way smaller at 2.5% in Japan.

This creates a unique opportunity for GLP to capture a larger slice of the overall logistics-facilities-market-pie as it is focused on providing modern facilities, which can be said to be better at serving customers’ needs.

5) The benefits of GLP’s large network

GLP’s large national networks – especially in China – “offers customers efficient logistics solutions for their expansion, leading to faster lease up, strong customer retention and good visibility on future demand.”

Put in another way, a larger network of logistics facilities would be very attractive for GLP’s would-be customers if they have a need for such facilities in different parts of a big country. This increases the rate at which GLP can sign up customers to lease more of its properties and improve the odds of keeping those customers for the long-term.

Those reasons are probably why the company has managed to snag Deppon as its second largest customer in China.

Deppon’s a leading integrated logistics provider in the country, helping their clients handle express road shipping, road freight, and air freight among others. It also plays an important role in helping improve the distribution efficiency of e-commerce companies in China.

Foolish Bottom Line

As investors, it is vital that we understand the operations and businesses of the companies that we’re either invested in or interested in.

Locally-listed companies in Singapore often release informative reports and presentations that allow us to know more about them. It pays to take a look at those from time to time.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.