Modern logistics facilities provider Global Logistic Properties Ltd (SGX: MC0) has been very busy over the past few months with an aggressive boost to its property portfolio, as revealed in its second quarter results which was released just this morning. Growing properties China is Global Logistic Properties’ largest market; the company has 570 completed properties there as at 30 September 2014, an increase of 6.1% from just three months ago. The land area occupied by the company’s completed properties in the country is also up from 9.6 million square metres to 10.1 million sqm. There’s plenty more in the pipeline -…
Modern logistics facilities provider Global Logistic Properties Ltd (SGX: MC0) has been very busy over the past few months with an aggressive boost to its property portfolio, as revealed in its second quarter results which was released just this morning.
China is Global Logistic Properties’ largest market; the company has 570 completed properties there as at 30 September 2014, an increase of 6.1% from just three months ago. The land area occupied by the company’s completed properties in the country is also up from 9.6 million square metres to 10.1 million sqm. There’s plenty more in the pipeline – Global Logistic Properties still holds another 10.1 million sqm of land in China that are currently under development, being repositioned, or held for future development.
In Japan, the number of completed properties and the land area they cover has remained constant at 87 and 3.9 million sqm, respectively, on a quarter-on-quarter basis. The company’s properties in Japan enjoys the highest lease ratio amongst its entire portfolio – 99% of its Japanese properties are currently rented out.
Moving on to Brazil, the final geographical market that Global Logistic Properties is in, the company had increased the number of completed properties by 5% from 80 as at 30 June 2014 to 84 as at 30 September 2014.
But despite the status quo being unchanged in Japan and having experienced growth in Brazil, Global Logistic Properties saw both its Japan and Brazil portfolio drop in value due to unfavourable fluctuations in the exchange rate between the local currencies and the U.S. dollar (the company reports in U.S. dollars).
Besides enlarging its property portfolio, Global Logistic Properties has also been raising more money for its fund management platform. Its total assets under management (AUM) is now at US$13.2 billion, up from US$11.1 billion at the end of FY2014 (financial year ended 31 March 2014). The company had also recently completed a US$2.5 billion deal with a Chinese Consortium consisting mostly of state-owned enterprises. Some of the companies in the consortium include China Life, China Development Bank, China Post, Bank of China and HOPU Funds.
Strong financial showing
All that busyness has paid off for Global Logistic Properties in the form of healthy top-line growth. For the first half of FY2015 (covering the six months ended 30 September 2014), the company grew its revenue by 24.9% year-on-year to US$362.2 million.
The top-line growth also resulted in a 15.7% year-on-year jump in operating profit to US$264.6 million.
However, Global Logistic Properties had to record one-off foreign-exchange losses of US$54 million in the second quarter due to the sale of some assets in Japan and Brazil that were related to the company’s fund management platform in the two countries. As a result, its earnings before interest and taxes (EBIT) and profit for the first half of FY2015 had fallen by 2% and 23% on year-on-year basis to US$473 million and US$269 million respectively.
But, the company had also presented another set of earnings which adjusted for the one-time losses. After the adjustment, Global Logistic Properties’ pro-forma EBIT and profit for the first half of FY2015 actually rose 16% and 12% year-on-year respectively to US$527 million and US$319 million.
Global Logistic Properties has also improved its balance sheet significantly over the half-year period. The company was in a net-cash position (where total cash exceeds total borrowings) of US$587 million as of 30 September 2014; in contrast, it was in a net-debt position of US$1.161 billion at the end of FY2014.
An intact growth story
It seems that the growth story of Global Logistic Properties is still intact. The company is still seeing great demand for its logistic properties for the long term. For instance, future supply of modern logistics facilities in China is “muted as limited land is being released into the market.” Given the aforementioned landbank in the country that Global Logistic Properties already has, the dearth in supply elsewhere could provide a strong tailwind for the company.
Besides growing its property portfolio, Global Logistic Properties’ fund management platform should also have a much bigger role to play in the overall strategy of the company in the future.
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