Guthrie

Guthrie: Makes a new 20 year high again at $0.775. Note that CIMB in its Small Cap report this week note that interest could return to Guthrie if there are follow-on corporate developments after its recent decision to gear up. House visited Guthrie recently. Guthrie has three businesses: property, engineering and leisure. In property, other than mall management and retail planning, Guthrie has ventured into developing Adora Green, a residential project under HDB's Design, Build and Sell Scheme. The co's core strength lies in commercial property. For grp's 9M12 results, core net profit grew 18.8% yoy to S$41.1m with a BV of $0.93. Interestingly, Guthrie recently added to its debt capacity. On 23 Jan, it issued S$125m worth of 3.70% fixed-rate notes due 2018. The notes were issued under a S$500m Multicurrency MTN Programme. Net proceeds will be used for investments and/or acquisitions, funding property development or asset-enhancement projects, refinancing existing borrowings, working-capital requirements and for general corporate purposes. What could lead to a narrowing of its current 27% discount to book value? Potential new acquisitions/projects funded in part by the new debt issued. Another re-rating catalyst could be the possible redevelopment of Guthrie House, a freehold 4-storey office building with retail outlets on the ground level and a basement car park located at 1 Fifth Avenue, which is near the Downtown Line. The co, however, may take its time to deliberate on this since the stations near Guthrie House may only come online in 2015. Guthrie paid a final DPS of 1.25 Scts and special DPS of 4.25 Scts for FY11, backed by record profits that year. House believe its base DPS is likely to be 1.25 Scts for a yield of 1.8% this ye. If it does pay special dividends of between 1.25 Scts to 4.25 Scts again, total yields could range from 3.7% to 8.1%.