Global Logistic Properties Ltd’s Results Could Give Us Clues On The Performance Of The US Economy

In 2009, billionaire investor Warren Buffett was asked an interesting question during a television interview. The interviewer asked Buffett what number he’d need if he was stuck on an island and yet wanted to know how the US economy is doing.

Buffett’s response? Railcar traffic. This makes logical sense. When the economy is thriving, companies would need to transport more goods from their point of production to where their end markets are. This shows up in logistical activity – and hence, railcar traffic.

Global Logistic Properties Ltd (SGX: MC0) may not be a railroad company in the US, but it could still provide us with clues on how the country’s economy is doing. In fact, it could do so for Brazil, China, and Japan as well.

Global Logistic Properties owns and manages modern logistics facilities in the four countries mentioned above. The company owns significant amounts of logistical space in the countries, as you can see in the chart below. And, in terms of the four countries’ modern logistics market, the company has by far the largest share in Brazil, China, and Japan; it is the second largest in the United States.

Source: Golden Logistic Properties’ investor presentation

In the table below, you can see the changes in Global Logistic Properties’ PATMI (profit after tax and minority interests) in each geography in its latest quarter (the second-quarter of 2016):

Source: Global Logistic Properties’ earnings release

China and Japan hasn’t done too well and Brazil’s numbers were really bad. The US was the odd one out with big growth in earnings.

Based on Global Logistic Properties’ numbers, it would seem like the US economy could be poised for a recovery in growth this year. Surprisingly, China has been doing badly. Would China’s economy do worse than expected? It’s too soon to know for now.

As for Brazil, as of the second-quarter of 2016, the country’s economy has shrunk for six consecutive quarters. Japan, meanwhile, has been mired in a low growth environment.

With all that being said, it’s worth noting that Global Logistic Properties is just one company operating in the four countries. So, the kind of logistical picture it can give is likely nowhere as comprehensive as one that can be gleaned from, say, railcar traffic happening across an entire country. And even then, railcar traffic can’t tell us everything about what’s happening.

But, the company’s numbers can still give us some clues on what’s going on in the economy of the four countries it has business in.

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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 doesn't own shares in any companies mentioned.