Guocoleisure

Guocoleisure: UOB Kay Hian maintains Buy but lowers TP to $1.03. House note that in the property valuation report released in Guoco Group’s offer document on Monday, the fair value of GLL’s hotel properties in the UK and development property in Molokai is $1.7b and $253m respectively. This is S$300m (13%) lower than house SOTP valuation. The revised SOTP valuation based on the fair value of GLL’s hotel properties and development properties as per valuation report is $1.47/share. House note however that in the long run, believe Guocoleisure remains an attractive undervalued asset play with stable earnings, as the fundamentals of the company are still intact. Fair value of the assets is still at a premium of $0.37/share ($560m) to the assets held at cost on balance sheet. As per its previous closing price of $0.88, GLL is trading at a 17% discount to its NAV ($1.05/share), and a 40% discount to its RNAV of $1.47/share based on the fair value of assets on the latest valuation report. Technically, the stock has retraced from S$0.98 and a break below $0.85 is likely to see more selling pressure towards $0.79. The potential resistance could be seen at $0.98/1.05.