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3 Things Investors Should Know About Global Logistic Properties Ltd

Global Logistic Properties Ltd (SGX: MC0) is the largest provider of modern logistics facilities in China with 14.9 million square metres of space in its portfolio. This towers over the second largest player which has just 1.9 million square metres of space.

China also happens to be the most important geographical market for the company. In its fiscal year ended 31 March 2016 (fiscal 2016), Global Logistic Properties had sourced slightly over half of its pre-tax operating profit from the country.

Here are three things investors may want to know about the logistics player:

1. China’s logistics sector is improving

Fung Business Intelligence had reported earlier this month that China’s logistics sector grew in May based on a reading of the China Logistics Prosperity Index (LPI), which came in at 54.2. (A level of over 50 corresponds to growth.)

The LPI is itself made up of 11 sub-indices and 10 of those were moving in the right direction, coming in at a level of over 50. It appears that worries over a hard landing in China may be overblown for now.

2. A strong balance sheet

From fiscal 2016 to fiscal 2015, Global Logistic Properties saw its net debt spike by a huge 167% from US$1.40 billion to US$3.75 billion. But, the company still managed to end fiscal 2016 with a net debt to assets ratio of just 19.5%.

3. Below-market valuation and share buybacks

Based on its trailing earnings per share of S$0.194 and current share price of S$1.78, Global Logistic Properties has a price-to-earnings ratio of only 9.2 This is lower than the SPDR STI ETF’s (SGX: ES3) PE of 11.4. The SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of the Straits Times Index (SGX: ^STI).

OCBC Research recently reported that Global Logistic Properties had bought 39.7 million shares of itself between 19 May 2016 and 23 June 2016. These buybacks may not seem like much, especially when considering the company’s share count of 4.744 billion as of 31 March 2016.

But it’s also worth considering that the investing legend Peter Lynch had used share buybacks as a criterion in his investing checklist. Lynch thinks that it’s a positive sign to see a company or its insiders buy shares.

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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 Ong Kai Kiat owns units in the SPDR STI ETF.