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Falling Knife of the Week: Global Logistics Properties

Global Logistics Properties Limited (SGX: MC0), a constituent of the Straits Times Index (SGX: ^STI) fell 5.4% so far this week, to close at $2.96 at the time of writing. The company is a provider of modern logistics facilities in China, Japan and Brazil. Its properties are located across 62 cities, serving over 700 customers.

GLP released its second quarter of 2014 (2Q 2014) results on 14th November 2013. It saw a revenue decline of 19% year-on-year to US$140 million. The net earnings came up to US$145 million, a decrease of 26% year-on-year.

For the first half of 2014 (1H 2014), the revenue went down 19% year-on-year to US$277 million. The net profit, however, was flat at US$349 million. The revenue decline was mainly due to the sale of properties to GLP J-REIT, listed in Japan, and foreign exchange movements. The net profit was driven mainly by revaluation gains of US$242 million.

As of 30 September 2013, GLP had a net debt of US$1.5 billion and weighted average debt maturity was 4.7 years. The gearing ratio stood at 21.2%. Comparatively, Mapletree Logistics Trust (SGX: M44U) carries a gearing ratio of 34.4%.

GLP also launched a US$3 Billion China Logistics Fund on the same day of results announcement. The fund will be used to develop new, wholly-owned logistics development projects in China during the three year investment period

Jeffrey H. Schwartz, Co-Founder of GLP and Chairman of the Executive Committee, said, “We continue to make substantial operational progress across the company, thanks to strong demand in all our markets. The launch of our new China fund, the largest of its type in the world, is transformational for GLP. It will provide significant capital to support our sustainable long-term growth in this exciting market, while enhancing returns on our invested capital. Our strong development pipeline and best-in-class fund management platform will enable us to strategically scale our business while delivering superior risk-adjusted returns for our stakeholders.”

GLP is trading at a historical PE ratio of 17.4 and sports a dividend yield of 1.4%.

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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 Sudhan P doesn’t own shares in any companies mentioned.