Guocoleisure

Guocoleisure: DMG reiterate their Trading BUY Call with TP:S$0.78). House note that the London Olympics is less than 2 months away and celebrations are currently in full swing in Europe. Co. owns and manages, under the Thistle and Guoman brands, 37 hotels and over 8000 rooms in the UK. Among these, over 5,000 of the rooms are located in London City, in prime districts from Knightsbridge to Mayfair and Kensington. The London Olympics Council has pre-booked over 60% of the room stock in London to cater to Olympics participants, leaving the rest of the revellers scrambling for the remaining available rooms, causing room rates to more than double to £300-400/night. Beyond the short-term boost to room sales from the Olympics, believe the stock of GLL represents a sound investment proposition given its portfolio of cash-generative businesses. House use SOTP valuation methodology to value GLL.