Stephen king once said ' There will be no gain without risk."
Global Logistic Properties (GLP) is a leading provider of modern logistics facilities with a US$38 billion portfolio comprising 53.7 million square meters of logistics facilities across China, Japan, Brazil and USA. Listed in Singapore at $1.96 per share since 2010.
There was rumor started circulating online about possibility of privatization and the share price jumped to $1.90. Since it listed in 2010, it have hardly trade about its IPO price. I read about the rumor and I got very interested about this counter. I begun to study the company's profile and I came to a conclusion that this company was a real value "BUY" even if the rumor turn up to be false. It was way below book value and under appreciated by investors. It should worth at least $2.80 and above per share based on my opinion.
The positive attributes that I like about GLP:
1. Market leader - huge portfolio of properties with modern logistic, high demands from the blooming e-commerce.
2. Right market trend - Part of the critical components of modern e-commerce, warehousing for semi and finished products, last mile delivery solutions.
3. Below IPO - it was trading below IPO price for many years even as the profit grows over the years.
4. Good sponsor - total 10 cornerstone investors including Singapore GIC during IPO.
So, I initiated my trading plan on GLP. I started buying at $1.96 and continue to accumulate until it hits $2.50. I set my target to sell above $3 or wait until they announce the buyout deal. Waited patiently riding the share price uptrend for many months as the rumors spread like wild fire.
In July, there was a sudden dropped in share price, more than 10% in an hour period due to rumor that the privatization failed. Honestly, I'm really felt the pressure and wanted to run for the exit. I had so much gain from my entry that I felt I need to take some profit out from the table. So, I sold about 10% of my holding before GLP suspended from trading pending announcement just to manage my risk.
The announcements come in 1 week later turned up to be heart lifting event. They announced a record S$16 billion privatization deal offering price at $3.38 per share and the deal closed on Jan 2018.
With this deal concluded, my trade on GLP net about $19,700 not inclusive of dividend paid out for that year. Investment period of 8 months and the investment return rate (IRR) were >30%.
- WILLIAM CHENG
