Performance review

The first quarter of 2022 results are in line with market expectations

CICC GLP warehousing and Logistics REIT announced its results for the first quarter of 2022: operating income of 93.05 million yuan at the fund level, profit before interest, tax, depreciation and amortization of 63.44 million yuan, available for distribution of 67.65 million yuan, in line with expectations.

The operation of assets is stable as a whole. In the first quarter of 2022, the lease renewal of the seven bids held by the Fund landed smoothly, more than 95% of the expired lease area was renewed, and the average occupancy rate at the end of the period was 98.33%, which was only 0.45 percentage points lower than that at the end of 2021 (mainly because the occupancy rate of GLP Beijing Airport Logistics Park dropped to 95.22% from 97.71% at the end of last year). During the period, the company level of infrastructure projects achieved a total income of 90.76 million yuan, an increase of 2.8% month-on-month, and the marginal rate of net interest before interest, tax, depreciation and amortization increased to 72.07% (71.79% in the fourth quarter of 2021).

The performance of the fund has grown steadily. The total income at the fund level in the first quarter of 2022 was 93.05 million yuan (we expect the annual operating income to be 383 million yuan), an increase of 5.2% over the fourth quarter of 2021; the net cash flow generated by operating activities was 73.33 million yuan, an increase of 23.6% over the fourth quarter of 2021; the amount available for distribution is 67.65 million yuan (we expect the amount available for distribution for the whole year to reach 253 million yuan).

Trend of development

Future business performance is expected to remain stable, the medium-term dimension suggests that attention should be paid to the potential of fund-raising. We believe that the overall operating condition of the Fund's assets is sound, the overall lease expiration ratio can be controlled in 2022, and modern warehousing facilities, as one of the infrastructure of economic activities, are less affected by the epidemic than other asset classes. we believe that the certainty of the fund to meet the expected allocation is still strong. On April 15, the Shanghai and Shenzhen exchanges issued the draft of "Business guidelines No. 3 for Public offering Infrastructure Securities Investment funds-newly purchased Infrastructure projects (for trial implementation)", stipulating for the first time the detailed rules for the acquisition and expansion of China's public REITs assets. We believe that CICC GLP warehousing and Logistics REIT is one of the first batch of public offering REITs products with good potential for expansion (by the end of the third quarter of 2021, the total floor area of GLP's warehousing and logistics facilities in China is about 4781 million square meters), we suggest that investors actively pay attention to the follow-up revision of the rules and the progress of the implementation of the actual expansion.

Profit forecast and valuation

Keep the forecast of the amount available for distribution of the fund in 2022-2023 unchanged, the holding rating and the 12-month target total yield of 5.2% unchanged, corresponding to the expected dividend yield of 3.55% and 1.65% price upward space (we give the fund a fair price of 1.1 times NAV at the end of 2022). We are still optimistic about the allocation value of warehousing and logistics targets.

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.