Latest Earnings from Global Logistic Properties Ltd: Drop in Profit Seen, But Management’s Still Upbeat

Global Logistic Properties Ltd (SGX: MCO) released its first-quarter earnings for its fiscal year ending 31 March 2017 (FY2017) last Friday.

As a quick background, the company – which is known as GLP for short – is a modern logistics facilities provider with businesses in four countries, namely, China, Japan, Brazil, and the US. The company develops and subsequently runs the facilities. It also has a fund management arm that manages funds that invests mainly in logistics properties.

With that, let’s take a look at the company’s latest results.

Financial highlights

The following are some of GLPs latest financial figures:

  1. Gross revenue for the quarter came in at US$206.6 million, up 8.6% from the same quarter a year ago.
  2. Profit attributable to shareholders (Including revaluation gains on investment properties) dropped 24.3% year-on-year to US$202.8 million. Profit before revaluations are accounted for had dropped by 46.8% to US$109.2 million compared to a year ago.
  3. GLP’s earnings per share (EPS) followed, dropping 23.4% year-on-year to 4.12 US cents.
  4. The firm’s net asset value (NAV) per share increased from US$1.86 at the end of the second-quarter of 2015 to US$1.94 for the reporting quarter, representing a 4.3% rise.
  5. For the quarter ending 30 June 2016, GLP had US$1.26 billion in cash and equivalents and US$4.36 billion in debt resulting in a net debt position of US$3.1 billion. This is a big decline from a year ago when the net debt position stood at US$1.63 billion (cash and equivalents of US$2.34 billion and debt of US$3.97 billion).
  6. Free cash flow for the reporting quarter came in at US$44.4 million (operating cash flow of US$47.3 million and capital expenditure of US$2.9 million). This was lower than the previous year when FCF stood at US$115.1 million (operating cash flow of US$117.3 million and Capex of US$2.2 million).

Operational highlights

GLP’s revenue had grown because of higher rents in China due to the completion and stabilisation of development projects there. An increase in management fee income from the inclusion of GLP US Income Partners II and growth in development activities in Japan also contributed to GLP’s higher revenue.

The company’s top-line would have been higher were it not for the weakening of the Chinese renminbi against the US dollar and the ongoing rent adjustments in China resulting from the country’s transition from a business tax to value-added tax (“VAT”) regime.

New and renewal leases signed in the reporting quarter rose by 17% compared to a year ago. On leases that are renewed, GLP’s properties enjoyed rental increases of 9.6%. The company’s customer retention rate came in at 71%, a slight increase from the 70% seen in the first-quarter of FY2016. GLP’s average lease ratio stood at 91% at the end of the reporting quarter, down slightly from the 92% seen a year ago.

The road ahead

GLP’s chief executive, Ming Z. Mei, shared the following comments in the earnings release on the company’s future outlook:

“GLP’s well-located facilities are benefitting from long-term structural trends in domestic consumption. We will maintain strong investment discipline and focus on markets with high customer demand and limited supply. Demand from institutional investors to partner with GLP remains strong, and we will continue leveraging our fund management platform for strategic expansion.”

GLP’s shares closed at $1.93 each on Friday. This translates to a price-to-book ratio of 0.74.

For more investing insights and updates on what's happening in the world of finance, you can sign up here for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Esjay does not own shares in any companies mentioned.