Could Global Logistic Properties Ltd Be A Bargain Now?
https://www.fool.sg/2016/02/15/could-global-logistic-properties-ltd-be-a-bargain-now/
By esjay - February 15, 2016
Global Logistic Properties Ltd (SGX: MC0) is a property investment holding company. More specifically, the firm owns, manages, and develops modern logistics facilities in four countries, namely, China, Japan, Brazil, and the United States.
The company announced its fiscal third-quarter earnings earlier this month. In the earnings release, Global Logistic Properties commented that it “remains mindful of the near-term challenges in the local and global economic environments.”
This could be one of the reasons why investors are pessimistic about the prospects of Global Logistic Properties as alluded to by the 37% decline in its shares over the past year to S$1.63 currently. With such a steep decline, let’s analyse the company’s finances to see if it could possibly be a bargain at the moment.
For this we will be using four metrics: The price to earnings ratio (P/E), the price to book ratio (P/B), the net debt to equity ratio, and the dividend yield.
Global Logistic Properties has trailing earnings of US$0.13 per share (approximately S$0.182 per share). At the company’s current share price of S$1.63, this implies a P/E ratio of 9. This is much lower when compared to the SPDR STI ETF’s (SGX: ES3) P/E ratio of 10.5. The SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s market bellwether, the Straits Times Index (SGX: ^STI).
Moving on to the P/B ratio, at end-December 2015, the company’s net asset value per share stood at US$1.83 (around S$2.56). This gives Global Logistic Properties a P/B ratio of just 0.64, which means investors are getting the logistics outfit’s net assets (total assets minus total liabilities) at a 36% discount to their accounting worth.
Next, we have the net debt (total debt minus cash and equivalents) to equity ratio. Global Logistic Properties had US$4.49 billion in total borrowings and US$1.13 billion in cash and bank balances as of 31 December 2015. With an equity value of US$12.94 billion, the company has a net debt to equity ratio of 0.26. This looks relatively reasonable to me for a company that is still growing.
Lastly, Global Logistic Properties had paid a dividend of S$0.055 per share in its last fiscal year (year ended 31 March 2015). This gives the firm a historical yield of 3.5%. While not entirely an apples-to-apples comparison, it is lower than the SPDR STI ETF’s trailing dividend yield of 3.9%.
From the four metrics we’ve looked at, it seems like Global Logistic Properties is appealing from a valuation perspective (it has a reasonable dividend yield and a low net debt to equity ratio, P/E ratio, and P/B ratio). That said, the metrics shouldn’t be taken as the final word on the investing merits of the company – they merely serve as useful starting points for further research.