Guocoleisure

Guocoleisure / Guoco Group: In an announcement by Guoco Group released yesterday night, the grp revised their previous offer: unconditional cash offer of HK$88/share to 1) an unconditional cash offer of HK$88/share if privatization condition is not satisfied or waived, and an additional HK$12 (total cash offer of HK$100) if privatization condition is satisfied or waived 2) new conditional cash offer of HK$100 if privatization condition is satisfied (shareholders can choose either one of the options) The HK$100/share offer is 13.6% higher than the previous offer of HK$88/share and a 2.6% premium to the previous closing of Guoco Group. It is to encourage previous disinterested shareholders to accept the privatization offer. As at FY12, the BV/share for Guoco Group is HK$134.35/share. UOB Kay Hian note that the increase in offer by Guoco indicates that they see deep value in Guoco Group, which may be visible in the pending valuation report to be released by 30 April. Since Guocoleisure is a subsidiary of Guoco Group, believe this is positive news for the stock as it does have a portfolio of undervalued assets (London hotels and Oil and gas royalty) held at cost on balance sheet. House currently have a buy recommendation on Guocoleisure, with a TP of $1.19