Fourth quarter 2021 results are in line with market expectations

CICC GLP warehousing and Logistics REIT announced its results for the fourth quarter of 2021: quarterly operating income of 88.46 million yuan and available distribution amount of 68.52 million yuan per quarter, in line with market expectations.

After the adjustment of the tenants, the lease renewal landed smoothly. The average occupancy rate of the seven bids held by the fund at the end of 2021 was 98.78%, an increase of 2.14 percentage points from the end of the third quarter (96.64%), mainly due to the tenant adjustment of GLP Beijing Airport Logistics Park. its rental rate increased from 85.94% at the end of the third quarter to 97.71% at the end of the year, and the occupancy rate of the assets of the other six bids remained stable. In the fourth quarter of 2021, a total of six tenants' leases expired and 100% renewal was achieved during the period.

Asset operations were stable in the fourth quarter as a whole. The fund level realized operating income of 88.46 million yuan in the fourth quarter of 2021 and 176 million yuan in the second half of the year (we expect the theoretical operating income for the whole year to be 370 million yuan). The amount available for distribution during the four seasons period is 68.52 million yuan (the net cash flow generated by operating activities during the period is 59.34 million yuan), the cumulative available distribution amount since listing (June 7, 2021) is 151 million yuan (we expect the theoretical available distribution amount to reach 251 million yuan for the whole year), which is in line with our previous expectations.

Trend of development

It is expected that the future operating performance will continue to be robust, and the medium-term dimension suggests that we should pay attention to the potential of fund-raising. We believe that the operation of the Fund's assets is sound, the overall lease maturity ratio in 2022 is controllable, and the certainty of fulfilling the expected amount available for allocation is still strong. In the medium-term dimension, we suggest that we should pay close attention to the design and promotion of regulatory mechanisms for fund-raising.

Profit forecast and valuation

Keep the forecast of the available allocation amount of the fund in 2022 unchanged, and introduce the forecast of 255 million yuan of available allocation amount of the fund in 2023 (an increase of 0.7% over the same period last year). We expect the projected annualized dividend yield for 2022 to be about 3.3% corresponding to today's closing price. In the medium-term dimension, considering the strong investment demand for REITs and the development potential of the logistics real estate sector (including continued capital inflows in the primary market), we believe that the current fund price level is expected to be maintained (the current price is 17% premium to our estimated net asset valuation NAV at the end of 2022). Leave the holding rating and the 12-month target total yield unchanged at 5.2 per cent, corresponding to an expected dividend yield of 3.3 per cent and price upward space of 1.9 per cent (we give the fund a fair price of 1.2 times NAV at the end of 2022). In the follow-up, we suggest that we should pay attention to the specific disclosure of the fund's financial statements in the March annual report, as well as the timing and frequency of future dividend distribution.

Risk.

The quality of asset management has declined; the capitalization rate of warehousing and logistics assets may rise due to the faster-than-expected pace of overseas interest rate increases; and the worse-than-expected deterioration of the epidemic has led to lower-than-expected contract renewal in 2022.