GuocoLeisure

GuocoLeisure: With London Olympics just 46 days away, mkts are tipping GuocoLesiure to benefit from event. Grp has been streamlined with four key investments, namely: 1) hotel operations, with 37 hotels and 8000+ rooms under the Guoman and Thistle brands; 2) royalty entitlement to 2.5% of the value of all hydrocarbons produced in the Bass Straits in Australia, 3) 54,000 acres of land on the Hawaiian island of Molokai, 4) Clermont Leisure, a casino targeted at high rollers. The Olympics season has resulted in strong trading in London, with YTD Revpar up 7%, driven by a combination of higher rates and increased occupancies. GLL’s 5,000+ hotel rooms in London put it in prime position to benefit from the room demand during the event. Moreover, the stock is attractively priced on valuation grounds, with an estimated RNAV of S$1.10/share backed primarily by its hotels and Bass Straits. DMG estimates these two assets generate more than US$100m in annual cash flows. At current levels, the stock is priced at a 50% discount to its RNAV, with favourable risk-rewards.