Guocoleisure

Guocoleisure: Seeing quite a bit of interests on Guocoleisure. Lim & Tan initiating coverage on Guocoleisure with a BUY rating, noting that management has turned bullish and expect to experience an acceleration of pricing power across their London Hotels on the back of record occupancy and room rates. They expect the grp to transform into a global hotel operator with presence in 100 major cities by 2023, and its operations are now helmed by a new CEO who has a strong track record of delivering results and he and his team has been awarded 73.5m GLL options with an exercise price of 86 cents each to incentise them to succeed. The transformation will grow GLL’s presence from 2 cities to 100 cities and drive revenue and profit growth significantly. The transformation process in the next few years would put them in the same league as global hotel operators such as Hilton, Starwoods and Marriot, potentially bringing about a re-rating of its valuation closer to industry average of 15x EV/EBITDA. The transformation process allows GLL the option to go asset-light from owned hotels to managed hotels, boosting its ROE, ROA and earnings trajectory, as well as giving GLL the option to recycle assets; GLL is currently trading at a large 50% discount to its SOTP estimates of $1.70 and an even more massive 73% discount if the company successfully transforms into a global hotel operator over the next few years.