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Global Logistics Properties

Discover the sound business model of GLP with consistent revenue and profits, reasonable debt-to-equity ratio, and regular dividends. Despite negative FCF due to heavy investing, GLP receives cash from financing. CEO Ming's low stake is offset by variable compensation, ensuring alignment of interest. Benefit from historically low P/B ratio (0.74 as of Nov 23, 2016) offering a 35% upside potential. Quality of assets is strong, with minimal risk of major write-downs. Take advantage of this secure investment opportunity in the logistics sector.

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Global Logistics Properties

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  1. Global Logistics Properties 24 November 2016

  2. #1 – Business model

  3. #2 – Consistent revenue and profits

  4. #3 – Reasonable net debt to equity (34%)

  5. #4 – Consistent dividends

  6. #5 – Positive OCF and FCF? • Positive operating cash flows • But spending a lot on investing (and therefore negative FCF – but FCF may not be relevant) • And getting cash from financing (either debt or sale of stakes in associates)

  7. #6 – Alignment of interest – CEO has low stakes • CEO Ming owns about 49m shares (~1% of total 4,732m shares)

  8. #6 – Alignment of interest – Variable compensation • CEO’s compensation – USD 9.4 million per year • Fixed component 13% • Variable component 38% • Equity component 48%

  9. GIC is majority shareholder – 37%

  10. #7 – P/B at historical low! (concerns of China oversupply, but mainly 2nd tier cities - GLP has low exposure) • Current P/B (as at 23 Nov 2016): 0.74 -> 1.0 = 35% upside

  11. Quality of book value (assets) • 80% of assets are investment properties (68%) and associates & JV (12%)

  12. Risk from write down of assets is not substantial • Only one major write down in the past 6 years • Write down of about 5% of net book value • Minimal risk in my opinion (since my MOS is 26% - P/B of 0.74)

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