GLP reports 52% rise in Q2 net profit as China rentals rise

GLP says its lease ratio in China is 87 percent and it expects operations to remain stable there.

GLP reports 52% rise in Q2 net profit as China rentals rise
A worker sorts packages at a warehouse. Reuters

Singapore's' Logistic Properties (GLP) recorded a 52 percent rise in second quarter net profits, driven by rising incomes from development projects in China and continued expansion of fund management platform.

Net profit for the three months ended 30 September 2016 rose to US$173 million from US$114 million a year ago, the logistics service provider said.

The strong results were underpinned by recurring income from operations, development and fund management, chief executive Ming Z. Mei said in a statement. "Our business is supported by long-term structural trends in domestic consumption. We maintain strong investment discipline and see room for cap rates to compress further in this financial year," the CEO added.

GLP said its lease ratio in China was 87 percent and it expects China operations to remain stable in the near term. The mid to long term outlook for China remains positive, supported by strong secular drivers such as e-commerce and organized retail.

Meanwhile, the lease ratios in Japan and US remained high at 98 percent and 94 percent respectively.

The company said its fund management business represents a recurring source of income that is growing consistently every year. The second quarter fund management fees were US$47 million, up 25% year-on-year.

In September GLP said it would be acquiring its third US logistics portfolio.

Bloomberg reported last week that an investor group that includes sovereign wealth fund China Investment Corp (CIC) raised interest to take over GLP. However, GLP said it was not in discussions with any group.