Global Logistic Properties’ Brazil acquisitions via JVs mark its first step to becoming a real global player, Citigroup says. “We are surprised with the strong 18%-19% IRR generated by the Brazil assets, which should drive an immediate NAV enhancement of 8%. Now, GLP is the No.1 logistic facilities provider in all three countries in which it operates, and we see growth engines in all three locations.”
It says Brazil’s supply-demand outlook is favourable with less than 20% of existing stock made up of modern facilities, with strong modern-facility demand driving Sao Paulo market rents up 12.9% annually since 2008. Citigroup expects strong fee income as its fund-management platform expands aggressively to US$7.2 billion ($8.8 billion) assets-under-management. It raises its target to $3.24 from $2.99, at par with NAV and 1.5x P/B, noting GLP trades at a 16% NAV discount and 1.25x P/B.
“A strong development pipeline coupled with a robust earnings basis should continue to raise GLP’s book value. Furthermore, we see more re-rating opportunities ahead with more NAV accretive acquisitions.” It raises FY12-14 earnings forecasts by 4.4%, 13.0% and 12.9% respectively, but with dilution effects, FY12-14 EPS forecasts rise 0.9%, 9.1% and 9.0%. It keeps a Buy call. GLP is down 1.9% at $2.54.
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