Global Logistic Properties - A yen for more recycling

The yen continues to weaken but lower yields implied by the market should neutralise the impact on GLP’s asset valuations. We believe that the market is now ideal for GLP to recycle more assets in Japan to facilitate future growth or possibly a higher dividend payout. We make a few adjustments to our model 1) lower FY13-15 core EPS estimates by 17-23% for a weaker ￥ vs. US$ and earnings lost from assets injected into GLP J-REIT, 2) a 50bp decline in Japanese cap rates and 3) higher AUM fee assumptions as we expect more asset recycling in the next 12 months. Our target price which is based on SOP is raised by 8%. Maintain Outperform with catalysts from lower cap rates and asset recycling initiatives. 
  
Poised for more recycling 
The expected reflation of the Japanese economy is driving acquisition appetite for logistics properties and culminating in lower cap rates. LaSalle IM has reportedly confirmed the sale of its second portfolio held in its JLF II for around ￥90bn, implying an NOI yield of 5.2%. This is around 60bp lower than the initial portfolio that GLP acquired from the vendor at end-2011. More recently, Nippon Prologis REIT has also announced an acquisition of eight logistics properties from its sponsor for US$1.3bn. We believe that revaluation gains from GLP’s Japanese assets may come faster than expected and we expect the group to recycle more Japanese assets in 2H13.   
  
Avenues to lift valuations 
We see a few value propositions 1) There is 10ct per share upside if cap rates are compressed by 50bp. 2) An enlarged AUM platform could immediately add 10ct a share. Longer-term, we believe GLP will also adopt the same strategy for its China portfolio which, at its current pro-rata GFA of 10.3m sm, implies a larger AUM in the future. This could lift valuations by another 21ct per share. 3) The redeployment of its excess capital into China at current run rates for the next five years could lift valuations by 38ct per share. All in, we estimate potential for another 34% upside if the group succeeds in its execution. Proceeds from its initial J-REIT spin-off are still largely untapped for acquisitions. We do not dismiss the possibility of a higher dividend payout if GLP is unable to find accretive acquisitions soon.   
  
Yen remains a drag 
We estimate that a 10% decline in the ￥ would lower our SOP value by 2%. 

Singapore Banks to Distribute New ATM Cards

Retail banks in Singapore starting this month will replace their customers’ magnetic stripe ATM cards with new plastic that contains an embedded chip to better safeguard against fraud, the Association of Banks in Singapore (ABS) announced Wednesday.

The move will affect all ATM cardholders in Singapore. The entire industry exercise is expected to be completed by end 2014.

Chip technology provides greater security for all Singapore-based payments, including ATM cash withdrawals and transactions, as well as NETS payments at point-of-sale terminals, said ABS.

The data encoded on the magnetic stripe card is easily read and copied making it easier for a magnetic stripe ATM card to be easily duplicated. However, the microprocessor chip on a chip card is protected by cryptographic encryption and virtually eliminates the ability to copy the contents of the chip to another card, it added.

The chip-based card also complies with the MAS standard of data security.

The ATM card migration exercise is part of a slew of payment card security measures first announced by ABS in January 2012.

“As the industry rolls out another measure to safeguard consumers’ interests, we wish to reassure the public that the banking industry takes security concerns seriously. We ask consumers to co-operate with their banks in the upgrading of the ATM cards by providing their banks with the updated contact details if they have not done so,” said Ong-Ang Ai Boon, Director, ABS.

Banks have different roll-out timelines for the chip migration exercise and will be engaging their cardholders at different times.

For example, DBS will start their migration exercise from May, OCBC from August and UOB from October.

Two More ETFs Exempted from Investor Review Restrictions

Two exchange traded funds (ETFs) – the Nikko AM Singapore STI ETF and the ABF Singapore Bond Index Fund – were reclassified as Excluded Investment Products (EIPs).

EIPs, like ordinary shares and REIT units, do not require retail investors to undergo an account review by their financial intermediaries before investing in such products.

This brings the total number of SGX-listed EIP ETFs to four.

All four can be traded in Singapore dollars and offer investors exposure to the benchmark Straits Times Index, two regional stock indices and government bonds.

The Monetary Authority of Singapore (MAS) in early 2012 introduced new rules requiring retail investors to complete Customer Assessment Reviews (CARs) with their financial intermediaries before investing in products classified as Specified Investment Products (SIPs).

MAS later allowed certain products, notably ETFs that met certain criteria, to be exempt from the SIP classification. With the addition of two such ETFs last week, Singapore Exchange (SGX) now has four funds that have been re-classified as Excluded Investment Products (EIPs) from their previous SIP tags. Like ordinary stocks and Real Estate Investment Trust (REIT) units, EIPs can be bought and sold by retail investors without needing to complete a CAR.

The four EIP ETFs offer investors exposure to the Singapore benchmark Straits Times Index (STI), two regional stock indices and government bonds. The Nikko AM Singapore STI ETF and the ABF Singapore Bond Index, both managed by Nikko Asset Management Asia, acquired EIP status on April 30.

The CIMB FTSE ASEAN 40 ETF and CIMB S&P Ethical Asia Pacific Dividend ETF, both managed by CIMB-Principal Asset Management, were the first two ETFs to be re-classified EIPs.

DOUBLE BPL SHOWDOWN AT CLARK QUAY WITH TIGER BEER - MEDIA INVITE (050513)

Special thanks to Tiger Beer for organising this LIVE mega screening as I am a Manchester United fan. The event started from 7pm at Clark Quay Central Fountain on Sunday, 05 May 2013. The first match is Liverpool FC vs Everton FC which kicked off at 8.30pm. The second match is Manchester United vs Chelsea FC which kicked off at 11pm.

I also have the chance to catch up with some of my blogger friends such as Hong Peng, William, CK Chai.

Watching football matches with Tiger babes and free flow Tiger Beer, what else can we ask for?

Seated in the VIP STAND, we really have a lot of privacy and space. Time to share secrets?


Final result of Liverpool FC vs Everton FC is 0-0.
Final result of  Manchester United vs Chelsea FC is 0-1.

Please check out Tiger Football for latest updates!