Update | Logistics facility owner GLP to lower China development targets

Global Logistic Properties, the biggest owner of modern logistics facilities in China, announced on Friday it will slow down its development projects in the mainland after the unusual departure of customers in June amid the stock market rout as well as short-term weak demand from some sectors including solar panels and in certain cities such as Tianjin and Dalian.

The company plans to cut annual targets for new starts to US$1.7 billion from the previous US$2.2 billion and completions will be lowered by 20 per cent to US$1.1 billion, although it maintains a positive view for the long term.

“The recent capital market incident has created some concerns among customers and we just want to take a more conservative approach,” chief executive officer Ming M. Mei told investors after reporting a 49 per cent year-on-year growth in global earnings to US$268 million during the April-June period, led by higher asset values and development gains.

Shares of Singapore-listed GLP fell 8 per cent to end at S$2.3, underperforming a 1.45 per cent drop in the city state’s benchmark FTSE Straits Times Index.

The stock market in Shanghai closed down 1.13 per cent on Friday, taking total loss in July to 14 per cent, the worst monthly decline since August 2009. Across the world, many companies including auto makers are predicting that a slowdown in China will hit their profits in the second half.

During the quarter, GLP started US$428 million of new developments across four major markets including Japan, Brazil and the United States, and completed US$453 million of developments.

China earnings were up 50 per cent to US$99 million, as a 25-basis-point compression in cap rate to 6.5 per cent drove up fair value.