Profits Grow at Global Logistic Properties

Global Logistic Properties (SGX: MC0) is one of the largest logistic facilities provider in the markets that it serves, namely China, Brazil and Japan.

The company released its third quarter results for financial year 2014 yesterday and recorded quarterly revenue of US$171 million, down 2% from the previous year. Net income for the quarter on the other hand, moved up 56% year-on-year to US$176 million, mainly due to fair value gains from the company’s properties.

Performance for the year

For the nine months ended 31 Dec 2013, Global Logistic Properties achieved revenue of US$448 million, down 13% year-on-year from US$517 million. However, with stronger contribution from its associates and joint-venture partners, the company’s operating profit is stable around US$339 million.

Together with the fair value gain of its properties – the increase in the appraised value of the company’s property portfolio – the company had recorded profits of US$525 million, some 14.1% higher compared to a year ago. This translates into earnings per share of 10.49 US cents, up 12% year-on-year.

During the third quarter itself, Global Logistic Properties saw strong leasing demand in China, with new leases up 51% year-on-year to 485,000 square metres. In addition, the company’s seeing rents grow by 9.5% for its renewed leases during the quarter.

Japan is also seeing strong demand, with leasing area up 140% to 197,000 sqm.

Global Logistic Properties continues to invest in the future, with more than S$2.8 billion worth of development projects in the pipeline, with a leasable area of 9.7 million sqm. Furthermore, there is also a growing fund management platform, with management fees for the quarter more than doubling since the previous year to US$15 million.

The company has not declared a dividend for this quarter.

Main highlights of the year

The company managed to maintain its leading position in the logistics facilities market in China, Japan and Brazil. Currently, it has 626 properties under its belt, with a total area of 13.8 million sqm. The occupancy ratio is also stable, with all markets having a lease ratio of at least 89%. The company has a strong cash position of US$1.26 billion on its balance sheet and a low leverage ratio (net debt / total assets) of 11.8%. The weighted average debt maturity increased to 4.5 years, up from 4 years.

Looking ahead

Global Logistic Properties’ co-founder and chief executive, Ming Z. Mei, commented on the company’s future plans:

Our business continues to gain momentum. We are seeing strong market demand driven by sustained domestic consumption which contributed to the volume of new and expansion lease activity we saw in [the third quarter of financial year 2014]. The opportunities in all of our markets remain compelling and we look forward to continued progress.”

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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 Stanley Lim doesn’t own shares in any companies mentioned.