GLOBAL LOGISTIC PROPERTIES | HOLD
TARGET PRICE: S$2.87
MAY 19 CLOSE: S$2.93
OCBC Investment Research, May 19
GLP's Q4 FY17 profit after tax and minority interests (Patmi) increased 62 per cent year on year to US$247.1 million (S$342m) mainly due to higher asset values as we saw portfolio cap rates compress over the quarter in Japan, US and Brazil.
On a core basis, however, after adjusting for non-recurring items, Q4 FY17 earnings fell 5 per cent year on year mainly due to lower contributions from the group's second US portfolio after its syndication in Q2 FY17.
Overall, we judge this quarter's number to be broadly in line with expectations. Management reports continued customer demand for its logistic facilities globally, with the group's average lease ratio at a healthy 91 per cent as at end-Mar 2017 (albeit down one per cent quarter on quarter due to some weakness in China), and group new and renewal leases up 35 per cent year on year to 13.3 million square metres, 6.3 per cent growth in same-property net operating income and 8.9 per cent rent growth in renewal leases.
Regarding the ongoing strategic review, GLP reports that it remains in discussion with several shortlisted parties following its evaluation of non-binding proposals received and the due diligence process is ongoing.
Management reiterates that there is no assurance that any transaction will materialise from the review.
An ordinary dividend of 6 cents per share has been proposed.
SINGAPORE AIRLINES | HOLD
TARGET PRICE: S$10.10
MAY 19 CLOSE: S$9.98
UOB Kay Hian, May 19
SIA surprised with a loss of $138m versus our expectation of an $8m profit.
While SIA managed to boost load factor, this was achieved at the expense of yields, it fell by a whopping 7.5 per cent year on year in Feb 17.
SIA and other regional carriers need to cut capacity to boost yields. Maintain "hold". But we cut our target price to S$10.10, still valuing SIA at 0.7 times FY18 forecast book value-ex SIAEC.
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