Asia Pacific Equity Research 23 May 2014

Overweight

Global Logistic Properties Ltd

GLPL.SI, GLP SP Price: S$2.81

FY14 results review: A slightly soft quarter

Price Target: S$3.20

 4QFY14 PATMI ex-revaluation gains were slightly soft, at US$54mn, bringing FY14 to US$250mn, 9% below our estimate of US$276mn. The group recorded US$92mn in revaluation gains (1% of portfolio) with stable Japan and China cap rates at 5.2% and 7.0%, respectively, but with a c.50bps expansion in Brazil, to 9.3%. NTA and NAV increased modestly, to US$1.74/share and US$1.84/share, respectively, with see-through leverage (net debt to assets) lowered to 8.9%. The group also declared a S$0.045/share dividend, representing a 68% PATMI-ex-reval payout and a 1.6% yield.  Strong 4Q China operating statistics. As disclosed earlier, 4QFY14 China new and expansion leases were 1mn, bringing the total to 2.3mn for the year, up 61% Y/Y. Occupancy for the China portfolio also improved, from 89% to 91%. The group acquired a record 1.7mn sqm of land in the quarter, with 25% of these acquisitions coming from the SOE consortium partnerships. E-commerce activities now represent 25% of total leased area in China.  FY15 development starts guidance of US$2.7bn. Management is now guiding for FY15 development starts of US$2.7bn, up 38% Y/Y, with China the main driver at US$1.7bn (+43% Y/Y). While leasing/land acquisitions attributable to the China consortium remain modest, we believe the announcement of any consortium-linked activity would validate the merits of the deal and be a key near-term catalyst. Management now guides for the first investment tranche of US$1.64bn to be injected by 06-Jun.

Singapore Property Joy Wang

AC

(65) 6882-2312 [email protected] Bloomberg JPMA WANG J.P. Morgan Securities Singapore Private Limited

Choon Keong Ong, CFA (65) 6882 -2354 [email protected] J.P. Morgan Securities Singapore Private Limited

Cusson Leung (852) 2800-8526 [email protected] J.P. Morgan Securities (Asia Pacific) Limited Price Performance

3.0 S$ 2.8 2.6 2.4 May-13

Aug-13

Nov-13

Feb-14

May-14

GLPL.SI share price (S$) FTSTI (rebased)

Abs Rel

YTD -2.8% -6.3%

1m 1.8% 1.2%

3m 0.7% -5.0%

12m -1.7% 1.7%

 We retain our Overweight rating with our Dec-14 PT of S$3.20 unchanged, based on our FY15 RNAV estimates. Key downside risks include an unexpected soft leasing period that could result in GLP’s cutting back on development and investment in China. Global Logistic Properties Ltd (Reuters: GLPL.SI, Bloomberg: GLP SP) $ in mn, year-end Mar FY13A FY14A FY15E FY16E Revenue ($ mn) 642 598 556 676 Net Profit ($ mn) 684 685 559 585 EPS ($) 0.15 0.14 0.12 0.12 Core EPS ($) 0.07 0.05 0.06 0.07 DPS ($) 0.03 0.04 0.04 0.04 Revenue growth (%) 13.5% (6.8%) (7.1%) 21.7% EPS growth (%) 24.9% (2.1%) (19.2%) 4.6% ROCE 4.3% 3.8% 3.7% 4.6% ROE 8.5% 8.0% 6.5% 6.7% P/E (x) 15.3 15.6 19.3 18.4 Core P/E (x) 33.8 42.6 37.6 31.9 P/BV (x) 1.3 1.2 1.3 1.2 EV/EBITDA (x) 24.5 30.1 31.4 27.5 Dividend Yield 1.5% 1.6% 1.6% 1.6% RNAV/Share 3.01 3.18 3.33

FY17E 815 661 0.14 0.08 0.04 20.6% 13.0% 4.6% 7.2% 16.3 29.5 1.2 26.4 1.6% 3.54

Company Data Shares O/S (mn) Market Cap ($ mn) Market Cap ($ mn) Price (S$) Date Of Price Free Float(%) 3M - Avg daily vol (mn) 3M - Avg daily val (S$ mn) 3M - Avg daily val ($ mn) FTSTI Exchange Rate Price Target End Date Price Target (S$)

4,596 10,319 10,319 2.81 23 May 14 14.04 38.14 30.5 3278.02 1.25 31-Dec-14 3.20

Source: Company data, Bloomberg, J.P. Morgan estimates.

See page 10 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com

Asia Pacific Equity Research 23 May 2014

Joy Wang (65) 6882-2312 [email protected]

Key catalysts for the stock price: • Key beneficiary of rising demand for logistics facilities in China, Japan and Brazil, strongest growth prospects through e-commerce activities in China

Upside risks to our view: • Better-than-expected leasing dynamics around potential China growth opportunities • Shorter funds deployment timeframes, resulting in shorter asset development cycles • Continued asset recycling via asset sales to GLP J-REIT

Key financial metrics

FY15E

FY16E

FY17E

FY18E

Revenues (LC) Revenue growth (%) EBITDA (LC) EBITDA margin (%) Tax rate (%) Net profit (LC)

556 -7.1% 474 85.3% 11% 559

676 21.7% 598 88.3% 8% 585

815 20.6% 696 85.3% 9% 661

1000 22.7% 823 82.3% 10% 752

EPS (LC) EPS growth (%) DPS (LC) BVPS (LC) Operating cash flow (LC mn) Free cash flow (LC mn) Interest cover (x)

0.116

0.122

0.138

0.156

-19.2%

4.6%

13.0%

13.8%

0.04 1.78 319 -881

0.04 1.85 392 -1148

0.04 1.95 474 -1505

0.00 2.09 587 -1961

6

5

4

3

Net margin (%) Sales/assets (X) Debt/equity (%) Net debt/equity (%) ROE (%)

100.6% 0.04 28.4% 8.2% 6%

86.4% 0.05 38.4% 23.0% 7%

81.0% 0.05 49.2% 40.8% 7%

75.1% 0.05 63.3% 59.7% 8%

Key model assumptions

FY15E

FY16E

FY17E

FY18E

China capex (US$ M) China rents (RMB/sqm pd) Japan rents (JPY/sqm pm)

1,700 1.06 1,166

2,210 1.07 1,189

2,873 1.08 1,213

3,735 1.09 1,237

Source: Company and J.P. Morgan estimates.

Downside risks to our view: • Volatility in JPY, RMB and BRL that could swing the group's net profit and net asset value in USD • Any adverse factors that affect the group’s ability to deliver strong growth, including lack of demand for logistics space or delays in land acquisitions/construction • Inability to deploy the group’s surplus capital accretively

Valuation and price target basis Our Dec-14 price target of S$3.20 is based on our FY15E sum-of-theparts valuation. Our NAV estimate for GLP assets is S$2.29/share; the AUM business is valued at S$0.28/share, or 20x current-year fee earnings; and the development premium is S$0.61/share, based on the PV of our China devt gains.

Sum-of-the-parts valuation S$/share Net tangible asset value Fee management business Development premium Total valuation

2.29 0.28 0.61 3.18

Source: Bloomberg, Company and J.P. Morgan estimates.

2015E NAV breakdown Corporate 12% Brazil 14%

China 52% Japan 22%

Source: J.P. Morgan estimates.

JPMe vs. consensus, change in estimates Sensitivity analysis

FY15E core PATMI

SOTP

FY15E

FY16E

Sensitivity to

impact

impact

JPMe old

0.058

0.074

10% decline in current rental rate 50bps cut in cap rate assumption 10% USD appreciation

-16.3% 0.0% -11.4%

-10.1% 5.7% -12.4%

JPMe new % chg Consensus

0.060 3% 0.064

0.070 -5% 0.074

Source: J.P. Morgan estimates.

Core EPS (LC)

Source: Bloomberg, J.P. Morgan estimates.

Comparative metrics Price (S$) 23-May-14 CapitaLand City Developments Keppel Land Overseas Union Enterprise CapitaMalls Asia Global Logistic Properties

3.21 10.50 3.51 2.31 2.35 2.81

Mkt cap 13,669 9,548 5,426 2,102 9,160 13,375

Source: Bloomberg, J.P. Morgan estimates. Prices are as of 23-May-14.

2

RNAV

($M) Current 5.60 14.38 5.64 4.39 2.94 3.18

Core P/E (x)

P/BV (x)

% disc

FY14E

FY15E

FY14E

FY15E

ROE

-42.7% -27.0% -37.7% -47.3% -20.2% -11.7%

25.9 18.3 12.9 153.8 37.2 33.8

21.0 16.1 11.6 55.1 29.1 42.5

0.9 1.3 0.9 0.7 1.4 1.3

0.8 1.2 0.8 0.6 1.3 1.3

6.2% 7.5% 7.1% 3.1% 8.4% 6.5%

Asia Pacific Equity Research 23 May 2014

Joy Wang (65) 6882-2312 [email protected]

FY14 results summary Table 1: GLP: FY14 earnings summary US$ in millions, otherwise specified, year-end March 4QFY14 150.4 89.8 160.0 53.7 63.1 13% 8% 1.84 1.74

Total turnover EBIT (ex revaluation) PATMI PATMI excluding revaluation Core PATMI Net D/E (x) Net debt to total assets (x) NAV per share NTA per share

3QFY14 170.9 115.7 176.2 77.8 69.8 17% 11% 1.81 1.70

% Q/Q -12% -22% -9% -31% -10% -4% -3% 2% 2%

4QFY13 125.1 88.1 224.0 82.4 47.1 11% 7% 1.77 1.66

% Y/Y 20% 2% -29% -35% 34% 2% 1% 4% 5%

FY14 598.3 404.6 685.2 249.9 248.2 13% 8% 1.84 1.74

FY13 642.1 483.5 684.3 349.9 325.5 11% 7% 1.77 1.66

% Y/Y -7% -16% 0% -29% -24% 2% 1% 4% 5%

Source: Company data, J.P. Morgan calculations.

Table 2: GLP: FY15 development starts guidance Specified, year-end March Development starts (US$ in billions) FY14 FY15E Y/Y chg (%) 1.20 1.70 43% 0.73 0.68 -8% 0.08 0.39 413% 2.01 2.77 38%

China Japan Brazil Total

Development starts (sqm in millions) FY14 FY15E Y/Y chg (%) 2.50 3.30 32% 0.45 0.45 -1% 0.07 0.40 471% 3.02 4.15 37%

Source: Company data.

Figure 1: GLP China portfolio completion vs. new leases sqm in thousands, year-end March 1200

1,044 880

1000 800 600

519

513

610 357

400 200

280

70

202

277 80

469

360 350 180

575

322 300

370

3QFY13

4QFY13

198

390

485 434

2QFY14

3QFY14

320

0 1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

Total new and expansion leases

1QFY14

4QFY14

Total completion of space

Source: Company data.

Figure 2: GLP: China portfolio breakdown

Figure 3: GLP: Japan portfolio breakdown

sqm in millions, year-end March

sqm in millions, year-end March

20

5

15 10 5

2.6 2.5 7.0

4.7

3.5

4.2

4.1

4.4

3.0

3.1

3.6

3.4

3.6

8.2

8.7

7.3

7.6

8.0

5.7

4

3.6

3 2

9.5

0

0.3 0.2

0.4

0.4

0.3

0.3 0.3

0.5

0.5

3.6

3.6

3.6

3.7

3.7

3.8

3.9

1 0

2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 Completed properties Held for future development Source: Company data.

Properties under development

2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 Completed properties Held for future development

Properties under development

Source: Company data.

3

Joy Wang (65) 6882-2312 [email protected]

Asia Pacific Equity Research 23 May 2014

Table 3: GLP: quarterly income statement US$ in thousands, year-end March

Share of results (net of income tax) of jointly-controlled entities Share of results Share of changes in fair value of investment properties

2Q 2013 172,938 160,316 9,757 2,865 1,816 (372) (26,339) (27,492) 120,551 14,595 7,916 6,679

3Q 2013 173,510 165,892 7,618 0 882 (464) (27,725) (29,603) 116,600 12,586 8,825 3,761

4Q 2013 125,100 112,102 13,064 (66) 2,530 (367) (24,307) (37,402) 65,554 115,225 22,397 92,828

1Q 2014 137,156 121,863 13,809 1,484 1,311 (321) (23,030) (30,335) 84,781 32,971 9,462 23,509

2Q 2014 139,754 124,634 14,446 674 2,075 (303) (24,824) (32,490) 84,212 22,274 11,255 11,019

3Q 2014 170,948 148,335 16,541 6,072 3,564 0 (28,170) (34,462) 111,880 44,424 4,285 40,139

4Q 2014 150,430 134,895 15,602 (67) 951 0 (28,756) (38,961) 83,664 40,665 6,295 34,370

Profit from operating activities after share of results of jointly controlled entities Net finance costs Interest income Net borrowing cost Foreign exchange gain (loss) Changes in fair value of financial derivatives

135,146 (9,728) 2,020 (28,789) 15,386 1,655

129,186 (60,055) 1,711 (28,564) (34,153) 951

180,779 12,178 3,673 (26,761) 28,776 6,490

117,752 (7,970) 1,832 (21,208) 5,813 5,593

106,486 (27,840) 2,184 (21,624) 7,025 (15,425)

156,304 (11,328) 1,753 (21,053) (4,417) 12,389

124,329 (29,022) 1,851 (21,528) (1,916) (7,429)

Non-operating income/(expense) Profit before changes in fair value of investment properties Changes in fair value of investment properties Profit before income tax Income tax expense

364 125,782 114,790 240,572 (34,364)

9,833 78,964 78,829 157,793 (33,492)

171 193,128 71,184 264,312 (34,366)

(41) 109,741 135,029 244,770 (36,279)

5,609 84,255 107,006 191,261 (40,701)

(425) 144,551 74,120 218,671 (32,569)

(151) 95,156 92,364 187,520 (22,702)

Current Deferred Profit for the period

(6,444) (27,920) 206,208

(11,251) (22,241) 124,301

(52,088) 17,722 229,946

(12,928) (23,351) 208,491

(3,748) (36,953) 150,560

(10,420) (22,149) 186,102

6,253 (28,955) 164,818

194,536 11,672 2,328

112,761 11,540 4,023

224,033 5,913 940

203,953 4,538 3,342

144,997 5,563 3,369

176,224 9,878 13,356

159,976 4,842 4,162 (5,059)

Revenue Rental and related income Management fee income Dividend income received Other income Management fees Property-related expenses Other expenses

Attributable to: Equity holder of the Company ("PATMI") Non-controlling interests (“NCI”) Share of results Share of fund management fees payable to GLP Share of fund management fees capitalized in investment properties Share of changes in fair value of investment properties (net of income tax) Profit for the period

5,059 9,344 206,208

7,517 124,301

4,973 229,946

1,196 208,491

2,194 150,560

(3,478) 186,102

680 164,818

EBIT ex-revaluation PATMI ex-revaluation PATMI ex-revaluation and foreign exchange differences

128,831 103,710 86,669

135,259 56,877 90,079

88,121 82,395 47,129

94,202 64,633 53,227

101,076 53,716 62,116

115,740 77,765 69,793

89,808 53,739 63,084

PATMI – China PATMI – Japan

72,781 119,838

74,329 85,584

67,661 52,528

66,971 132,027

106,765 54,953

106,787 73,622

104,112 87,984

Source: Company data.

4

Joy Wang (65) 6882-2312 [email protected]

Asia Pacific Equity Research 23 May 2014

Table 4: GLP: China portfolio movements sqm in millions, year-end March 1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

2QFY14

3QFY14

4QFY14

Land reserve Opening balance Additions Conversions to land held for future development Newly acquired completed properties Cancelled Design adjustment Ending balance

8.77 1.00 (0.73) 0.00 0.00 0.00 9.04

9.04 0.95 (0.48) 0.00 0.00 0.00 9.51

9.51 2.14 (1.71) 0.00 0.00 0.00 9.94

9.94 3.50 (1.25) 0.00 (1.44) (0.26) 10.49

10.49 2.34 (0.58) 0.00 (0.38) 0.00 11.87

11.88 0.82 (0.79) 0.00 (0.10) 0.00 11.81

11.81 3.07 (0.96) 0.00 (1.49) 0.00 12.43

12.43 2.15 (1.74) 0.00 (0.09) 0.00 12.75

Land held for future development Opening balance Land disposal Conversions to land held for future development Development starts Design adjustment Ending balance

2.14 0.00 0.73 (0.47) (0.02) 2.38

2.38 0.00 0.48 (0.30) 0.03 2.59

2.59 0.00 1.71 (0.85) 0.00 3.45

3.45 0.00 1.25 (0.50) 0.01 4.21

4.21 0.00 0.58 (0.73) 0.00 4.06

4.05 (0.07) 0.79 (0.33) 0.00 4.44

4.42 0.00 0.96 (0.65) (0.01) 4.72

4.72 0.00 1.74 (0.80) 0.00 5.66

2.14 0.47 0.07 (0.18)

2.50 0.30 0.00 (0.36) 0.05

2.49 0.85 (0.08) (0.22) 0.00

3.04 0.50 0.00 (0.36) (0.05)

3.14 0.73 0.00 (0.32) 0.00

2.50

2.49

3.04

3.13

3.55

3.55 0.33 0.00 (0.39) 0.00 (0.13) 3.36

3.36 0.65 0.00 (0.40) 0.00 0.00 3.61

3.61 0.80 0.00 (0.85) 0.00 0.00 3.56

0.76 0.00 0.76

0.76 0.00 0.76

0.76 0.00 0.76

0.76 0.00 0.76

0.76 (0.01) 0.75

0.75 0.00 0.75

0.00 0.00 0.00

0.00 0.00 0.00

0.31 0.18 0.01 (0.18) 0.32

0.32 0.36 0.00 (0.29) 0.39

0.37 0.30 0.03 (0.25) 0.45

0.45 0.36 0.00 (0.15) 0.66

0.65 0.32 0.05 (0.21) 0.81

0.81 0.39 (0.31) (0.01) 0.88

0.88 0.40 0.09 (0.43) 0.94

0.94 0.85 0.00 (0.47) 1.32

5.37 0.00 0.00 0.18 0.00 5.55

5.55 0.29 0.00 0.00 0.00 5.84

5.84 0.25 0.00 0.00 0.00 6.09

6.09 0.15 (0.01) 0.00 0.00 6.23

6.23 0.21 0.00 0.00 0.00 6.44

6.44 0.31 (0.18) 0.00 0.00 6.57

6.57 0.43 0.00 0.00 0.00 7.00

7.00 0.47 (0.06) 0.00 (0.02) 7.39

Properties under development/repositioned Opening balance Development starts Conversions to being repositioned Newly completed development properties Design adjustment Disposal Ending balance Other facilities Opening balance Additions Ending balance Completed & pre-stabilized Opening balance Newly completed development properties Newly acquired completed properties Stabilized properties Ending balance Completed & stabilized Opening balance Stabilized properties Property disposal Conversions to being repositioned Design adjustment Ending balance Source: Company data.

5

Joy Wang (65) 6882-2312 [email protected]

Asia Pacific Equity Research 23 May 2014

Table 5: GLP: Announced leasing and development activities for the quarter Qtr 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14 4Q14

Date 7-Jan-14 8-Jan-14 9-Jan-14 9-Jan-14 9-Jan-14 9-Jan-14 9-Jan-14 9-Jan-14 9-Jan-14 9-Jan-14 22-Jan-14 22-Jan-14 22-Jan-14 22-Jan-14 22-Jan-14 22-Jan-14 27-Jan-14 27-Jan-14 27-Jan-14 27-Jan-14 28-Jan-14 26-Feb-14 27-Feb-14 27-Feb-14 3-Mar-14 3-Mar-14 3-Mar-14 31-Mar-14

Asset GLP Guarulhos GLP Sayama Hidaka I/II GLP Park Yangzhou ETDZ GLP Park Qihe GLP Park Yangzhou GLP Park Hefei Hi-Tech GLP Park Jiangxia GLP Park Zhengzhou GLP Park SND GLP Park Zengcheng Greater Tokyo Property Greater Osaka Property GLP Atsugi GLP Misato III GLP Fukuoka GLP Shinsuna GLP Park TEDA GLP Park Xiqing GLP Park Suzhou GLP Park Jiangxia GLP Park Langfang GLP Park Huangpi GLP Atsugi GLP Misato III GLP Park Xi’an ETDZ GLP Park Wangting GLP Park Wangting GLP Hiroshima

City Sao Paulo Tokyo Yangzhou Jinan Yangzhou Hefei Wuhan Zhengzhou Suzhou Foshan Greater Tokyo Greater Osaka Greater Tokyo Greater Tokyo Fukuoka Greater Tokyo Tianjin Tianjin Suzhou Wuhan Hebei Wuhan Greater Tokyo Greater Tokyo Xi'an Suzhou Suzhou Hiroshima

Country Brazil Japan China China China China China China China China Japan Japan Japan Japan Japan Japan China China China China China China Japan Japan China China China China

Dev (sqm)

Leasing (sqm) 106,000

Tenant Riachuelo New development Deppon Logistics Hyundai Mobis 3PL/wholesale distributors 3PL/wholesale distributors 3PL/wholesale distributors 3PL/wholesale distributors 3PL/wholesale distributors 3PL/wholesale distributors 3PL/wholesale distributors 3PL/wholesale distributors 3PL/wholesale distributors 3PL/wholesale distributors Asahi Logistics 3PL/wholesale distributors Sankyu Logistics Sankyu Logistics LightInTheBox.com Watsons Suning Vipshop 3PL/wholesale distributors 3PL/wholesale distributors Vanke leading hypermarket chain ANE Logistics Sagawa Global Logistics

127,000 16,000 10,000 19,000 18,000 12,000 12,000 12,000 11,000 69,000 35,000 35,000 22,000 15,000 4,000 11,000 5,000 15,000 12,000 46,000 36,000 14,000 5,000 17,000 12,000 10,000 21,000

Source: Company data.

Table 6: GLP: Asset valuation breakdown

China portfolio Completed & stabilized Completed & pre-stabilized Other facilities Properties under development or being repositioned Land held for future development

Pro rata valuation (LC in millions) 3QFY14 4QFY14 37,063 38,813 23,908 25,759 3,373 4,297 678 683 4,754 3,360 4,350 4,713

Japan portfolio Completed & stabilized Completed & pre-stabilized Properties under development or being repositioned Land held for future development

4,057 3,747 132 178 0

4,035 3,707 216 106 6

426,634 394,035 13,881 18,718 0

411,683 378,781 22,071 10,831 613

Brazil portfolio Completed & stabilized Completed & pre-stabilized Properties under development or being repositioned Land held for future development

617 491 0 53 73

629 515 0 27 87

1,444 1,149 0 124 171

1,422 1,164 0 61 197

10,740

10,914

Total GLP portfolio Source: Company data.

6

Pro rata valuation (US$ in millions) 3QFY14 4QFY14 6,066 6,250 3,913 4,148 552 692 111 110 778 541 712 759

Joy Wang (65) 6882-2312 [email protected]

Asia Pacific Equity Research 23 May 2014

Table 7: GLP: RNAV breakdown FY15E (US$ M)

(S$ M)

FY16E (US$ M)

Portfolio valuation China Japan Brazil

5,193.5 3,688.4 1,232.4

6,658.9 3,859.3 1,347.8

Adjust for: China debt Japan debt Corporate & others Cash & equivalents

-1,457.9 -1,758.6 -258.7 2,279.7

-2,624.8 -1,876.5 -389.1 2,279.7

Net tangible assets

8,918.7

Fee management business

1,090.0

Others adjustments

2,354.1

Valuation Valuation per share (US$) Valuation per share (S$)

12,362.8 2.57 3.18

11,059.2 2.29 1,351.6 0.28 2,919.1 0.61

9,255.1

(S$ M)

11,476.4 2.38 1,351.6 0.28 3,211.0 0.67

1,090.0 2,589.5 12,934.7 2.68 3.33

Source: J.P. Morgan estimates.

Investment Thesis, Valuation and Risks Global Logistic Properties Ltd (Overweight; Price Target: S$3.20) Investment Thesis Global Logistics Properties Limited (GLP) is a leading provider of modern logistics facilities in China, Japan and Brazil. Our OW rating is premised on rising demand for logistics facilities on the back of rising e-commerce/logistics demand in these markets, with the strongest growth prospects driven by e-commerce activities in China. To date, e-commerce activities represent 25% of China’s total leasing activity. Valuation Our Dec-14 price target of S$3.20 is based on our FY15 sum-of-the-parts valuation. Our NAV estimate for GLP assets is S$2.29/share; we value the AUM business at S$0.28/share, or 20x current-year fee earnings; and the development premium is S$0.61/share, based on the PV of our China development gains over a 10-year period. Average premium/(discount) to RNAV: 1 s.d. above average prem/(disc) to RNAV: 1 s.d. below average prem/(disc) to RNAV: Max prem/(disc) to RNAV: Min prem/(disc) to RNAV:

-17% -4% -29% 4% -44%

Source: J.P. Morgan

Risks to Rating and Price Target Given that a meaningful part of our valuation comes from the assumption that GLP will execute on its China growth strategy, any adverse factors that affect the group’s ability to deliver on strong growth, including a lack of demand for logistics space and delays in land acquisitions and construction, could significantly affect GLP’s valuation and more than wipe out the current premium valuation it enjoys. Other risks include volatility in JPY, RMB and BRL that could swing the group’s net profit and net asset value in USD. 7

Asia Pacific Equity Research 23 May 2014

Joy Wang (65) 6882-2312 [email protected]

JPM Q-Profile Global Logistic Properties Limited (SINGAPORE / Financials) As Of: 16-May-2014

[email protected]

Local Share Price

Current:

2.82

3.50

12 Mth Forward EPS

Current:

0.06

0.12

3.00

0.10

2.50

0.08

2.00 0.06

1.50 1.00

0.04

0.50

0.02

Earnings Yield (& local bond Yield) 6%

12Mth fwd EY

Implied Value Of Growth*

Apr/13

Current:

Nov/13

Sep/12

Jul/11

Feb/12

Dec/10

Oct/09

May/10

Mar/09

Jan/08

Aug/08

Jun/07

Apr/06

Nov/06

Sep/05

Jul/04

Feb/05

Dec/03

Oct/02

May/03

Mar/02

Jan/01

Aug/01

Jun/00

Apr/99

3%

Nov/99

Apr/13

Current:

Singapore BY

0.00

Nov/13

Sep/12

Jul/11

Feb/12

Dec/10

Oct/09

May/10

Mar/09

Jan/08

Aug/08

Jun/07

Apr/06

Nov/06

Sep/05

Jul/04

Feb/05

Dec/03

Oct/02

May/03

Mar/02

Jan/01

Aug/01

Jun/00

Apr/99

Nov/99

0.00

57.77%

0.70

Proxy

0.60

5%

0.50

4%

0.40

3%

0.30 2% 0.20 1%

0.10

PE (1Yr Forward)

Current:

35.3x

4.0x

40.0x

3.5x

Nov/13

Apr/13

Sep/12

Feb/12

Jul/11

Dec/10

Oct/09

May/10

Mar/09

Jan/08

Aug/08

Jun/07

Apr/06

Nov/06

Feb/05

Sep/05

Jul/04

Dec/03

May/03

Oct/02

Mar/02

Aug/01

Jan/01

Price/Book Value

45.0x

35.0x

Jun/00

Apr/99

0.00 Nov/99

Nov/13

Apr/13

Sep/12

Feb/12

Jul/11

Dec/10

May/10

Oct/09

Mar/09

Aug/08

Jan/08

Jun/07

Nov/06

Apr/06

Sep/05

Feb/05

Jul/04

Dec/03

May/03

Oct/02

Mar/02

Aug/01

Jan/01

Jun/00

Apr/99

Nov/99

0%

Current: PBV hist

1.3x

PBV Forward

3.0x

30.0x

2.5x

25.0x

2.0x

20.0x

ROE (Trailing)

Current:

8.86

20.00

Dividend Yield (Trailing)

Current:

Nov/13

Apr/13

Sep/12

Feb/12

Jul/11

Dec/10

May/10

Oct/09

Mar/09

Aug/08

Jan/08

Jun/07

Nov/06

Apr/06

Feb/05

Sep/05

Jul/04

Dec/03

May/03

Oct/02

Mar/02

Aug/01

Jan/01

Jun/00

Apr/99

Nov/13

Apr/13

Sep/12

Feb/12

Jul/11

Dec/10

May/10

Oct/09

Mar/09

Aug/08

Jan/08

Jun/07

Nov/06

Apr/06

Sep/05

Feb/05

Jul/04

Dec/03

May/03

Oct/02

Mar/02

Aug/01

Jan/01

0.0x

Jun/00

0.5x

0.0x Apr/99

1.0x

5.0x Nov/99

10.0x

Nov/99

1.5x

15.0x

1.42

2.0 1.8

15.00

1.6

10.00

1.4 1.2

5.00

1.0

0.00

0.8

-5.00

0.6 0.4

-10.00

0.2 Nov/13

Apr/13

Sep/12

Feb/12

Jul/11

Dec/10

May/10

Oct/09

Mar/09

Jan/08

Aug/08

Jun/07

Apr/06

Nov/06

Feb/05

Sep/05

Jul/04

Dec/03

May/03

Oct/02

Mar/02

Aug/01

Jan/01

Jun/00

Apr/99

Nov/13

Apr/13

Sep/12

Feb/12

Jul/11

Dec/10

May/10

Oct/09

Mar/09

Aug/08

Jan/08

Jun/07

Nov/06

Apr/06

Sep/05

Feb/05

Jul/04

Dec/03

May/03

Oct/02

Mar/02

Aug/01

Jan/01

Jun/00

Apr/99

Nov/99

Nov/99

0.0

-15.00

Summary Global Logistic Properties Limited SINGAPORE Financials 12mth Forward PE P/BV (Trailing) Dividend Yield (Trailing) ROE (Trailing) Implied Value of Growth

10418.36 27.69 SEDOL B4KJWS6 Real Estate Management & Devel Latest Min Max 18.14 39.81 35.34x 0.81 3.56 1.34x 0.00 1.77 1.42 -8.90 17.25 8.86 0.26 0.62 57.8%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs

8

Median 23.78 1.22 1.31 7.68 0.43

Average 25.49 1.28 0.86 4.92 0.44

2 S.D.+ 36.85 2.30 2.27 21.17 0.62

2 S.D. 14.14 0.26 -0.54 -11.33 0.26

% to Min -49% -39% -100% -200% -55%

16-May-14 As Of: 2.82 Local Price: 0.06 EPS: % to Max % to Med % to Avg 13% -33% -28% 166% -9% -5% 24% -8% -39% 95% -13% -44% 8% -26% -24%

* Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

Asia Pacific Equity Research 23 May 2014

Joy Wang (65) 6882-2312 [email protected]

Global Logistic Properties Ltd: Summary of Financials Income Statement $ in millions, year end Mar Revenues % change Y/Y EBIT % change Y/Y EBIT Margin (%) Net Interest Earnings before tax % change Y/Y Tax as % of EBT Net income (reported) % change Y/Y Core net profit % change Y/Y Shares outstanding EPS (reported) ($) % change Y/Y DPS % change Y/Y Balance sheet $ in millions, year end Mar Cash and cash equivalents Accounts receivable Inventories Others Current assets

FY14 598 (6.8%) 505 (14.4%) 84.4% 93 842 0.1% (132) 15.7% 685 0.1% 251 (18.8%) 4,760 0.14 (2.1%) 0.04 8.8%

FY15E 556 (7.1%) 474 (6.2%) 85.3% 86 651 (22.7%) (71) 10.9% 559 (18.4%) 287 14.3% 4,819 0.12 (19.2%) 0.04 0.3%

FY16E 676 21.7% 598 26.1% 88.3% 131 662 1.6% (53) 8.1% 585 4.6% 338 17.7% 4,819 0.12 4.6% 0.04 0.0%

FY17E 815 20.6% 696 16.4% 85.3% 190 755 14.1% (69) 9.1% 661 13.0% 365 8.1% 4,819 0.14 13.0% 0.04 0.0%

FY14 1,486 382 1,872

FY15E 1,959 382 2,345

FY16E 1,562 382 1,947

FY17E 882 382 1,267

LT investments 1,939 2,772 Net fixed assets 9,646 8,378 Total Assets 13,947 13,986 Liabilities ST Loans 143 143 Payables 576 576 Others 21 21 Total current liabilities 740 740 Long-term debt 2,449 2,619 Other liabilities 825 891 Total Liabilities 4,014 4,250 Shareholders' equity 8,758 8,560 BVPS 1.84 1.78 Source: Company reports and J.P. Morgan estimates.

2,889 10,199 15,527 143 576 21 740 3,742 939 5,420 8,931 1.85

Cash flow statement $ in millions, year end Mar EBIT Depr. & amortization Change in working capital Others Cash flow from operations

FY14 505 0 (107) (315) 263

FY15E 474 0 0 (240) 319

FY16E 598 0 0 (193) 392

FY17E 696 0 0 (187) 474

Capex Disposal/(purchase) Net Interest Free cash flow

(979) (651)

(1,267) (881)

(1,646) (1,148)

(2,140) (1,505)

Equity raised/(repaid) Debt raised/(repaid) Other Dividends paid Beginning cash Ending cash DPS

0 (177) (132) (150) 1,957 1,486 0.04

163 579 (134) (172) 1,486 1,959 0.04

0 1,123 (182) (172) 1,959 1,562 0.04

0 1,302 (244) (172) 1,562 882 0.04

FY14 84.4% 114.5% -

FY15E 85.3% 100.6% -

FY16E 88.3% 86.4% -

FY17E 85.3% 81.0% -

(8.9%) (6.8%) 0.1% (2.1%) 6.5 10.0% 11.1% 0.0 1.6 8.0% 3.8%

(8.0%) (7.1%) (18.4%) (19.2%) 6.4 7.6% 8.2% 0.0 1.6 6.5% 3.7%

21.7% 21.7% 4.6% 4.6% 5.2 18.7% 23.0% 0.0 1.7 6.7% 4.6%

20.6% 20.6% 13.0% 13.0% 3.9 29.0% 40.8% 0.0 1.8 7.2% 4.6%

Ratio Analysis $ in millions, year end Mar EBIT Margin (%) Net profit margin SG&A/Sales

Sales per share growth 3,011 Sales growth 12,569 Net profit growth 17,339 EPS growth Interest coverage (x) 143 Net debt to total capital 576 Net debt to equity 21 Sales/assets (x) 740 Assets/equity (x) 5,044 ROE 1,001 ROCE 6,785 9,379 1.95

9

Asia Pacific Equity Research 23 May 2014

Joy Wang (65) 6882-2312 [email protected]

Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention.

Important Disclosures



Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Global Logistic Properties Ltd.



Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Global Logistic Properties Ltd.



Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Global Logistic Properties Ltd.



Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Global Logistic Properties Ltd.



Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Global Logistic Properties Ltd.



Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Global Logistic Properties Ltd. Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan– covered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing [email protected] with your request. J.P. Morgan’s Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or e-mail [email protected]. Global Logistic Properties Ltd (GLPL.SI, GLP SP) Price Chart 5

OW S$2.5

4 OW S$2.9

OW S$3

OW S$2.7

OW S$2.9 OW S$3.15

OW S$3.2

3 Price(S$) 2

1

Date

Rating Share Price Price Target (S$) (S$)

18-Nov-10 OW

2.25

2.90

30-May-11 OW

1.98

3.00

15-Aug-11 OW

1.76

2.50

15-Aug-12 OW

2.34

2.70

07-Feb-13 OW

2.76

2.90

26-May-13 OW

2.85

3.15

31-Mar-14 OW

2.65

3.20

0 Oct 10

Jul 11

Apr 12

Jan 13

Oct 13

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Nov 18, 2010.

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the 10

Joy Wang (65) 6882-2312 [email protected]

Asia Pacific Equity Research 23 May 2014

average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.jpmorganmarkets.com. Coverage Universe: Wang, Joy Qianqiao: A-REIT (AEMN.SI), Ascott Residence Trust (ASRT.SI), CDL Hospitality Trusts (CDLT.SI), CapitaCommercial Trust (CACT.SI), CapitaLand (CATL.SI), CapitaMall Trust (CMLT.SI), CapitaMalls Asia (CMAL.SI), CapitaRetail China Trust (CRCT.SI), City Developments (CTDM.SI), Far East Hospitality Trust (FAEH.SI), Frasers Centrepoint Trust (FCRT.SI), Global Logistic Properties Ltd (GLPL.SI), Keppel Land (KLAN.SI), Keppel REIT (KASA.SI), Mapletree Commercial Trust (MACT.SI), Mapletree Industrial Trust (MAPI.SI), Overseas Union Enterprise Ltd (OVES.SI), Suntec REIT (SUNT.SI) J.P. Morgan Equity Research Ratings Distribution, as of March 31, 2014 J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients*

Overweight (buy) 44% 58% 45% 78%

Neutral (hold) 44% 49% 48% 67%

Underweight (sell) 11% 40% 7% 60%

*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst or your J.P. Morgan representative, or email [email protected]. Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

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Asia Pacific Equity Research 23 May 2014

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12

Joy Wang (65) 6882-2312 [email protected]

Asia Pacific Equity Research 23 May 2014

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