Guocoleisure

Guocoleisure: OSKDMG reiterates Buy with $1.79 TP, citing that investment case is still intact. Independent valuation of GLL hotels below expectation at US#1,370m vs expected US$1,680m, implying a US$310m shortfall. Think the valuation by Christie + Co is at best a conservative estimate of the open market value of GLL’s hotels, as the valuation is based on existing-use basis and does not take into redevelopment potential for prime, freehold properties such as the 801- room Tower Thistle and the 175-roon Thistle Kensington Gardens. GLL’s 55% stake in the Weeks Royalty gives it steady cash flow of US$45-50m per annum, with upside potential should exploration programs succeed in raising reserves. Believe the investment thesis for the stock remains intact and GLL’s portfolio of cash-generating assets is trading at deep discount to market values.