Earnings forecast for Global Logistic Properties slashed by 17-23%

Blame it on weaker yen.

According to CIMB, it made a few adjustments to its model 1) lower FY13-15 core EPS estimates by 17-23% for a weaker ¥ vs.US$ and earnings lost from assets injected into GLP J-REIT, 2) a 50bpdecline in Japanese cap rates and 3) higher AUM fee assumptions as we expect more asset recycling in the
next 12 months.

Here's more:

Japanese property has seen the strongest lift in sentiment, with the expected reflation of the Japanese economy leading to a sharp jump in the Topix real estate index (a near doubling since 3Q12).

But the impact of the reflation theme on GLP is not that straightforward, with the ¥//US$ now breaching 100 (c.20% weaker than a year ago), which will have a negative impact on its Japanese property income and valuations.

Our equity strategists Jason Todd and Chang Chiou Yi believe that the yen could breach 115-120 by end-2013, which wouldresult in more forex losses for GLP. We estimate that a 10% decline in the ¥ vs. US$ would lead to a 2% drop in our SOP valuation for GLP.

The group currently has 32% of its total assets in Japan and reports in US$.

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