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There is an article by Adele Teo on GuocoLeisure in the latest issue of The Edge

Does the article contribute more clarity? I did not read it since no interest on the counter.

(25-03-2013, 12:05 PM)greengiraffe Wrote: [ -> ]If that is the case, there is no harm to be BLUR

Gong Gong

(25-03-2013, 11:58 AM)cfa Wrote: [ -> ]Some insiders know something that we don't know ?

Spot on, they are doing us the favour.

My own take - if clear $0.865 convincingly, next targets will be $1.00 followed by $1.20 - 1.25.

OCBC Sec just issued a TA on G Leisure:

Bullish break of key resistance suggests more upside
Key obstacle conquered. GuocoLeisure is likely to see
further recovery after rebounding off its 4-month uptrend
support recently; this was followed by a strong bullish
break above the $0.80 key resistance on heavy volume
yesterday.
Indicator is bullish. The MACD has just initiated a sharp
bullish crossover; this suggests that the upside momentum
is accelerating.
Next resistance at $0.90. The counter could head higher
towards the next key obstacle at around $0.90 (key peak)
in the weeks ahead.
Immediate support at $0.80. Meanwhile, we advocate a
stop-loss exit at around $0.77, which is slightly below the
newly established resistance-turned-support level at $0.80.

I usually use OCBC as reverse indicator.....=P

DMG recommends:

GuocoLeisure: SGD0.83 BUY (TP: SGD1.25)

Due for a Re-rating

GuocoLeisure (GLL), the listed leisure and hospitality arm of the Guoco Group, is an undervalued gem sitting on a portfolio of cash-generative, hard-to-replace assets. Its key investments are: 1) the Guoman/Thistle hotels, the largest hotel operator in London with over 8000 rooms under management; 2) the Bass Straits Royalty Trust, entitling GLL to a perpetual stream of cashflow from oil and gas production in designated areas in the Bass Straits; 3) 54,000 acres of land in Molokai island, Hawaii, 4) Clermont Leisure, a casino targeted at high rollers. The stock is under-covered and we are the only broker with a rating on the stock.

Hidden value in hotel real estate. GLL’s crown jewel is its Guoman/Thistle hotel chain, the leading hotel operator in London. Guoman/Thistle owns some 5,200 rooms across 16 hotels in London, sitting on prime locations in the heart of London City. We estimate this portfolio is conservatively worth USD1.68 billion, against a historical book cost of USD1.2 billion. This implies a surplus of USD466m, or SGD0.43/share. An upcoming valuation exercise for GLL’s hotels, currently underway, as a result of a privatization offer for its parent Guoco Group by major shareholder Quek Leng Chan, should shed more light on the market value of its hotels and the embedded surplus of the related real estate value.
Bass Straits oil royalty - the well that keeps giving. GLL owns a 55% stake in the Weeks Royalty, which entitled it to a 2.5% royalty granted by BHP/EssoMobil on the gross value of all hydrocarbons produced and recovered in designated areas within the Bass Straits of Australia. Bass Straits is one of the most prolific oil and gas producing region in the world, having yielded more than 4 billion bbl of crude oil and more than 7 Tcf of natural gas since 1969. Drilling activities continued to be high, centered on the AUD4.4 billion Kipper Tuna Turrum project with an estimated 1.6 Tcf of gas and 140m bbl of oil and gas liquid. GLL’s royalty to this lucrative asset has been providing it with annual cash flow of USD40-50m, with potential upside on additional discoveries.
Trading at massive 53% discount to our SOTP valuation. We value GLL using a sum-of-parts methodology to best capture the disparate nature of its various investments. We value its Guoman/Thistle hotel portfolio at EUR250,000 per key for its London hotels, a 21% discount to the average transaction of EUR316,000 per key in 2012. We use net present value to value the cash flow stream from Bass Straits Royalty Trust, without factoring in upside from future reserve growth. Our valuation yields a SOTP of SGD1.78. We apply a 30% holding company discount to derive a TP of SGD1.25. In our view, GLL offers a compelling asset play with imminent catalysts from restructuring within the group and greater transparency on its hotel assets. Reiterate BUY.
Goh Han Peng
+65 6232 3893

Edison Chen
+65 6232 3892

Other Recent Summaries:

Counter has been experiencing pretty positive share price momentum the last few days. See
our recent reposts on the counter the last few wks, aparts from today's OSK DMG Rpt, for more info on the
counter.
- Guocoleisure: (The Edge) SCB was engaged as the independent financial advise and is due to publish a
report on Guoco’s asset valuation nxt mth. Market watchers note that Guocoleisure could be unlikely to
offload its main hotel assets, but it could divest off some of its non-tel assets. In particular, its pty
development units Molokai Properties and Tabua Investments could be up for a sale / spin-off. Molokai
properties owns a 54,677 acre property on the island of Molokai in Hawaii, where according to DMG, several
parcels of land have been transacted at prices above book value. Tabua Investments is Guocoleisure’s pty
investment arm and the Co. has ben actively looking for buyers for its Fiji assets. Meanwhile,
GuocoLeisure is receiving a steady stream of cash froman O&G investment, where it essentially earns
royalties from BHP and Esso. While the valuation report for Gucco Grp might not necessarily spark a
re-rating for Guocoleisure, it is worth noting that the former offered to take Guocoleisure private at
$1.25/share in 2005.

- GuocoLeisure: Technical Buy Call by OCBC. Note that GuocoLeisure is likely to see further recovery after
rebounding off its 4-month uptrend support recently; this was followed by a strong bullish break above the
$0.80 key resistance on heavy volume yesterday. The MACD has just initiated a sharp bullish crossover;
this suggests that the upside momentum is accelerating. Next resistance at $0.90. The counter could head
higher towards the next key obstacle at around $0.90 (key peak) in the weeks ahead.

- Guocoleisure: 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.

- Guocoleisure: NextInsight note that as Mr Quek Leng Chan has offered to take Guoco Group Limited,
private. Such an exercise will involve an independent financial adviser which has to evaluate whether the
offer by Mr Quek is fair. Expect the financial adviser would have to do a valuation of Guoco Group’s
assets in order to be able to assess the attractiveness of the offer by Mr Quek. If this were the case, it
is likely that Guocoleisure, being part of Guoco Group, may have to do a revaluation of its assets. Given
current market conditions and the nature of GLL’s assets, the revaluation exercise is likely to be
positive for GLL. GLL operates under two hotel brands namely Guoman and Thistle brands. These hotels are
valued at US$1.2b in GLL books as of 31 Dec12. With their portfolio of assets (refer to the 2012 annual
report), there is a likelihood that the assets may be worth more than what are recognized in the books.
Another interesting asset which they have is the 55.1% entitlement to the Weeks Royalty. The Wks Royalty
refers to a 2.5% overriding royalty relating to all hydrocarbons produced by BHP Billiton from designated
areas in the Bass Strait, Australia, granted by BHP. According to Esso’s estimates, the estimated reserves
for these designated areas are likely to last approximately another three decades. For the last 5 yrs, GLL
has been receiving a steady stream of cashflows of around US$39-54m p.a. This asset is recognized on GLL’s
books with a figure of US$122.4m as of 30 Jun 12, which is likely to be undervalued. nNote that GLL trades
at 0.68x P/BV (NAV / share: $1.075) with a historical div yield of 2.7%.

http://www.nextinsight.net/index.php/sto...-says-cimb-

There's Deep Value In GUOCOLEISURE, Says CIMB After Company Visit

Written by William Tng, CFA (CIMB)
Saturday, 16 March 2013 08:00
CIMB analyst William Tng CFA and his Singapore research team produced a report yesterday (March 15) on a stock (GuocoLeisure, 76.5 cents yesterday) that is increasingly in the limelight because of an event that will take place in April .....




William Tng CFA. Photo: CIMB
WE VISITED GuocoLeisure recently. This stock seems to offer deep value and is worth revisiting if management stays committed to unlocking value. Possible privatisation could be the jackpot.

a) What is core, what is non-core?

Hotels still accounted for nearly 73% of its assets as at end-Dec 12. We sense that if there are opportunities to sell off its non-hotel assets, management will not hesitate much.

Non-hotel assets owned by GuocoLeisure include: 1) Clermont Leisure, a casino in the UK; 2) Bass Strait Oil Royalty; 3) land on the island of Molokai in the Hawaiian island chain; and 4) a property development in Denarau, Fiji.

Given that GuocoLeisure has been actively looking for buyers for its Fiji assets, transactions could be sooner than later.

b) Is there value?

Yes! We reckon there is deep value in GuocoLeisure. It trades around a 30% discount to its book value per share of S$1.07. Come April, the investment community will get a better sense of the market value of GuocoLeisure’s assets, especially its hotels in the UK.

By then, the Independent Financial Adviser should have presented its findings to the Guoco Group (listed in Hong Kong) which has received a delisting offer from GuoLine Overseas Limited. Guoco Group owns an estimated 66% of GuocoLeisure.

We suspect that its actual discount to book is likely to be higher than 30%, since GuocoLeisure carries its hotel assets at cost on its books and depreciates them.

c) What can be done to narrow its discount to asset value?

We see three catalysts:

1) An immediate one is the revaluation of its hotel assets in April. However, GuocoLeisure is not required to change its accounting policy and we do not expect any revaluation gains to be booked.

2) Next could be the divestment of its non-hotel assets. However, this is beyond management’s control as divestments would depend on market opportunities and negotiations. What is positive is that management appears at least willing to entertain such possibilities.

3) Extracting greater value from its hotel assets, through greater cost efficiencies and possibly more branding.

Michael Bernard De Noma had been hired as the new CEO of Guoman Hotels Limited on 1 Aug 12.

Given his previous experience in both the consumer and financial industries, we believe there will be initiatives to improve guests’ staying experience (and hence their stickiness).

Initiatives that have been put in place include free WiFi at the group’s hotels, a loyalty programme (‘Signature’) and new IT infrastructure including a new revenue-management system.


Thistle Charing Cross Hotel in London.
Photo: Internet
In the UK, Guoman Hotels fall into the premium category and are located in central London.

Thistle, on the other hand, is an award-winning chain of quality full-service hotels throughout the UK and Malaysia. Given challenging economic conditions in the UK and the group’s current heavy reliance on its UK hotels, GuocoLeisure is turning to the Asia Pacific to balance its portfolio.

In Malaysia, Guoman Hotels operates two hotels under the Thistle brand in Port Dickson and Johor Bahru.

In its FY10 annual report, the group revealed its soft launch of its premier Guoman Hotel Shanghai.

News articles on Guocoland, the property arm of conglomerate Hong Leong Group (GuocoLeisure is also a member of the Hong Leong Group) suggest that it would build a new hotel next to the Menara Milenium, likely under the Thistle brand.

In Singapore, Guocoland is developing an integrated development at Tanjong Pagar. Located above the Tanjong Pagar MRT station, the 1.7m sf development will feature premier Grade-A office and retail space, an international hotel and exclusive residential apartments. The hotel portion could involve GuocoLeisure.

d) Privatisation possibility?

Not impossible but we sense that management is focusing on improving hotel operations and the potential divestment of its non-hotel assets so that investors can clearly identify GuocoLeisure as a hotel owner and manager.

At the same time, its major shareholder is busy with the privatisation offer for Guoco Group in Hong Kong.

That said, Bloomberg data does not suggest any shareholder with enough of a shareholding to thwart any privatisation attempts.

e) Hotel operations not loss making

Lastly, we would also point out that the hotel operations are not your money losing type that is usually associated with companies trading below their asset values.

The title of the WSJ article enclosed is:

Inner-city London calling out for apartments.

One key question to table in the upcoming AGM will be -

What is the redevelopment potential of G Leisure's Hotels in London into apartments or commercial uses.

Since it is angmo country, the process will be different from efficient Singapore. Like in Australia, the process may be so tedious that even embarking on one would take years.

Buddies input will be deeply appreciated.

GG

most of the hotels could be under conservation properties.

This article first appeared in The Edge Financial Daily, on April 15, 2013.

KUALA LUMPUR: The delay in issuing the response document by Guoco Group Ltd could prove costly for billionaire Tan Sri Quek Leng Chan’s (pic) HK$8.25 billion (RM3.22 billion) privatisation bid for the group.
The response document which details information on Guoco and recommendations from independent members of the board was initially supposed to be despatched on Jan 2 but it has been delayed to April 30.
In light of his failed attempt to privatise Hong Leong Capital Bhd (HLCap), would the tycoon consider raising his offer on Guoco? Quek’s failed attempt to take HLCap private has revealed that his plans are not fool-proof and minority shareholders have the power to turn down unsatisfactory offers.
Just like HLCap before the privatisation fell through, Guoco has been trading above the offer price of HK$88, averaging about HK$93.80 since the privatisation was announced on Dec 12 last year. Guoco’s share price closed at HK$95 last Friday.
To top it off, Guoco has also posted much healthier earnings. For the first half ended Dec 31, 2012, the group recorded a net profit of HK$3.34 billion compared to a net loss of HK$2.60 billion in the previous year.
The results were 150% better than the immediate preceding half-year’s net profit of RM1.3 billion ended June 30, 2012.
The improved results were due to the group’s principal investment business which posted a net gain of HK$2.93 billion, mostly from unrealised gains on trading financial assets following the recovery of the financial markets during the period.
The group’s trading financial assets amounted to HK$13.45 billion as at Dec 31, 2012, in addition to its cash pile of HK$11.60 billion against HK$34.14 billion in borrowings.
Similar to HLCap, Guoco has a very small free float. Quek alone has a 71.52% stake in Guoco through his related companies. Together with parties acting in concert, he holds 74.47% of Guoco leaving 25.53% of the independent votes to decide on the offer.
However, for the privatisation to go through, Quek will need to get 90% of shareholders to accept his offer of HK$88 per share.
When HONG LEONG FINANCIAL GROUP BHD (HLFG) attempted to take HLCap private, it already owned more than 80%. However, that proved to be its Achilles heel. It would only take dissenting minorities with a stake of 2.1% to block the exercise. Excluding HLFG, HLCap’s top 30 shareholders had a combined stake of 4.78% in HLCap. Therefore, it requires relatively few individuals to block the exercise.
In Guoco, it would only take a dissenting minority of 2.55% to block the exercise and there are at least two shareholders with the power.
First Eagle Investment Management LLC has a 7% stake and Artisan Partners Holdings LP has 4.97% in Guoco. Even the next five biggest shareholders have combined holdings of 2.8%, enough to prevent the privatisation deal.
Although Quek’s offer of HK$88 per share is a 25% premium over the last traded price prior to the takeover bid, it may not be attractive enough for minorities to part with their shares in the diversified conglomerate.
Based on the latest earnings figures, that offer values Guoco at 6.16 times earnings and 0.59 times its net assets of HK$149.18 per share.
Guoco holds a wide variety of businesses, ranging from banking to gaming to property development, one reason why the offer of HK$88 may not reflect the intrinsic value of the group.
Guoco’s banking operations include HLFG, which controls, Hong Leong bank, the fourth largest bank in Malaysia and by extension, HLCap.
The group also boasts a 15% stake in Bank of East Asia (BEA). BEA is a small but well-regarded family-owned financial institution, which holds a 23.5% stake in AFFIN HOLDINGS BHD.
Under its gaming arm, Guoco Group has a 74.5% stake in UK-listed The Rank Group plc via Singapore-listed Guoco Leisure Ltd. The Rank Group boasts 150 gaming outlets in Britian, Spain, and Belgium, with over 22.4 million annual customer visits.
Its principal market is in Britain where it operates the Grosvenor Casinos, 35 of them, as well as Mecca Bingo which has 103 clubs.
Closer to home, Guoco’s property development arms are Singapore-listed GuocoLand Ltd and Bursa Malaysia-listed GuocoLand Bhd. For these assets, HK$88 per share would be a steal for Quek given that analysts are valuing Guoco at between HK$95 and HK$105 per share. However, with the share price above the offer price, it looks like investors are aware of Guoco’s value as well.

http://www.hkexnews.hk/listedco/listcone...423037.PDF

Parent 53.HK suspended pending offer related news. Price shot up to end at HK$97.45 after holding steady around HK$93 for the longest time.