Global Logistic Properties (GLP) is counting on China’s booming domestic market to remain buoyant.
This came after the Singapore-listed company posted an 80 per cent plunge in quarterly net profit.
GLP’s earnings last quarter were hurt by the earthquake in Japan which disrupted its warehousing services.
In China, rising interest rates lowered demand
Still, china contributed 69 per cent of revenue and strength in the domestic economy is far outweighing the global slowdown.
GLP deputy chairman Jeffrey Schwartz said: “Our businesses (in China) are not relying on exports.
“Ninety per cent of our demand is driven by domestic consumption. Retail sales are growing even faster than the overall economy.
“While China is the envy of the rest of the world on its GDP growth, its retail sales growth is worth two times of GDP growth (of) 17, 18 per cent.”
GLP cited the absence of fair value gains on investment properties for quarterly net profit to have shrunk by some 80 per cent as compared to a year earlier.
Despite this and the economic doom and gloom, the Singapore-based company remains optimistic about growth prospects in Japan and China.
The global slowdown has presented GLP with an opportunity to purchase properties, at a lower price.
Cushman & Wakefield vice-chairman Donald Han said: “In China, market yields would be about six to eight per cent for logistic properties.
“For Japan, it would be about seven to 10 per cent. What used to be that, you would be able to negotiate for maybe, a hundred to two hundred basis points higher, in today’s market, by virtue of factoring the global economic uncertainty and some risk factors in that sense.”
GLP shares ended the day with a gain of about 1.5 per cent.
Source : Channel NewsAsia – 12 Aug 2011