GuocoLand - Company visit note

Multiple projects to come on stream
GuocoLand is a Singapore-listed real estate developer and manager with a focus on integrated developments across three core markets, namely Singapore, China and Malaysia. We met the company management recently. Management mentioned that the various integrated development properties, including Tanjong Pagar Centre in Singapore and two Guoson Centres in China, are currently on track for their completion in the next 12-18 months. According to management, these together with continuous residential sales across the markets, should see better earnings growth going forward. Management is also open to options that could help realize and unlock asset value.

Singapore a key focus market
With the office and the retail portion of Tanjong Pagar Centre to be ready by mid next year, Singapore will be one of the key focuses for the group. Management acknowledged the increasing competition in the office market but cited its strategy to balance occupancy and rents. Several leases have been committed with tenants across multiple industries. On the residential side, only 20 units were left at Goodwood Residence with prices recovering slightly to about S$2,400psf. While QC charge has kicked in, management is in no rush to cut price further due to the minimal amount. For Leedon Residence, the group will be more aggressive in marketing with target ASP for the whole project at S$1,900 psf.

Guosen Centre Beijing Dongzhimen back in play?
Management indicated that the title for Guosen Centre Beijing has been received post the court ruling in September 2014. That said, the group is currently redoing their feasibility study on the project to update the product offering. Management is also open to options that could allow faster return of capital including stake sales. In Shanghai, Guosen Centre Chengfeng phase two is on track for its completion this year with residential to be launched in the later part of 2015.


Technical Analysis
Daily Chart
Capital management and valuation
Management is comfortable with the current gearing of 150%, citing c.50% debt is project level funding. GuocoLand is currently trading at 0.8x P/B and 21x consensus FY15 P/E, versus sector average of 0.96x P/B and 27x FY15 P/E. (Read Report)

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- Deutsche Bank Markets Research

Source : Deutsche Bank Markets Research

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