Guocoleisure

Guocoleisure (GLL): UOB Kay Hian note that GLL’s properties are held at deep discount to book value. GLL carries its hotels and property, plant and equipment at historical cost less accumulated depreciation. According to mgt, the last revaluation date was in 2005. With an independent valuation report of GLL’s assets likely to be issued in the near term (due to privatisation of Guoco Group, the ultimate holding company of GLL), believe it will shed light on the highly undervalued property portfolio. GLL is trading at an attractive valuation at 0.69x FY12 P/B. Add that steady income stream from oil and gas royalty and its market leader position in London’s hotel operation also make GLL an attractive investment to value investors. Believe the current depressed valuation is due to the lack of market exposure by GLL. With recent news about the privatisation of GLL’s parent Guoco Group and plans to set up a hotel in SG and house believe there will be an increase in investor interest in the stock.