[HOLD评级]CHINA VANKE(000002):POSITIVE ACQUISITION OF GLP; MAINTAINING HOLD ON FAIR VALUATION

时间:2017年07月17日 18:06:17 中财网


Acquisition of 21.4% of GLP at SGD3.38/shareAfter market close on 14 July, Vanke announced that Nesta (a consortium inwhich it owns 21.4%) had entered an agreement with GLP for potentialprivatization at SGD3.38/share (25% premium to GLP’s 12 July closing)。 Theattributable consideration to Vanke is SGD3.4bn, and Vanke can appoint twodirectors (out of 11) to the board, but is not entitled to the FY17 dividend. Thedeal is pending approval from GLP’s shareholders and the Court, and GLP willbe delisted from SGX-ST if successful (expected to finalize by 14 Apr 2018)。 Weare positive on the deal due to the potential synergies on its logistics propertybusiness.
  Positive on the deal for providing synergies to its logistics property businessAlthough we estimate the deal will only lift Vanke’s FY18-19F core profits by~2%, we are positive on it, considering GLP owns a total of 17.5m completedlogistics properties in China with another 11.2m sqm under development. Webelieve its brand equity should provide synergies to Vanke’s existing business,potentially making it one of the largest logistics property operators in China(Vanke now owns 27 logistics properties with 2.2m sqm GFA)。 Also, webelieve the price is fair, given that Vanke is acquiring at 1.3x of GLP’s FY17book value of USD1.85/share (equal to SGD2.54/share)。

  GLP is the largest logistics property operator in ChinaGLP owns a portfolio of 55m sqm of logistics properties, including 28.7m sqmin China (17.5m sqm completed and 11.2m sqm under development) and26.3m sqm in Japan, the US and Brazil (23.6m sqm completed and 2.7m sqmunder development)。 GLP is also one of the largest real estate fund managersin the world, with AUM of ~USD39bn. Bloomberg consensus expects it toachieve USD1.0-1.1bn revenue and USD315-382m core net profits in FY18-19.
  Valuation and risks
  We raise our TP by 12% to RMB25.42 (based on a 10% discount to end-2017FNAV of RMB28.24) after factoring in this deal, the acquisition of GuangdongInternational Trust’s assets (mostly located in Guangzhou), and June landacquisitions. It is trading at 8.7x FY18F P/E and at a 13% discount to NAV.
  Downside risks include: 1) Baoneng Group selling its shares on the secondarymarket, and 2) a failure to acquire quality sites to sustain growth; while upsiderisks are better-than-expected sales and margin expansion.
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