Logistics in Asia: Temasek and Yamato hope to have a smooth journey


Supply bottlenecks have pushed the share prices of European logistics groups such as Maersk to record highs. This phenomenon has also sparked interest in Asian freight forwarders. Singapore’s Mapletree and Japan’s Yamato Building have just announced their respective investment plans. Given the stronger growth prospects in the region, these may be better in the long run.

Western media have recently been flooded with reports of “threats to Christmas.” The ports of Long Beach, California and Felixstowe in the United Kingdom are already crowded with containers full of consumer goods. But the backlog started in Asia.

Products manufactured in hubs such as China and Vietnam are hampered by shortages of ships and trucks. Transportation and warehousing profits have soared.

This has stimulated investment in industries that were once unpopular. With the support of Singapore’s state-owned investor Temasek, Mapletree Logistics Trust will spend more than US$1 billion to acquire assets in China, Japan and Vietnam. Japan’s largest developer Yamato Housing Industry is developing international cargo transportation business in Southeast Asia. Its subsidiary Daiwa House Logistics Trust plans to raise approximately US$343 million on Friday. This will be Singapore’s largest listing this year.

Mapletree’s interpretation is frustrating. In the past year, it has gained nothing from its own stock. Daiwa House’s stock fell, lagging behind the benchmark Nikkei 225 index’s 14% gain. As the growth of the logistics and industrial sectors in the region remains strong, it hopes to get a boost.

Even if the global supply chain is interrupted and returns to normal sooner than expected, investors will have a way out. Recent investments in logistics and manufacturing supply chains are mainly concentrated in Southeast Asian countries such as Vietnam, Thailand and Malaysia. All of these have a local e-commerce market that is far less mature than the rest of the region. The local demand is expected to grow rapidly.

Dividends are another hedge. Mapletree’s expenditure exceeds 4%. Daiwa House Trust’s IPO price is expected to yield 6.5%. These are not inferior to companies such as Maersk, although the business lacks the same pricing power.

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