GUOCOLAND

GUOCOLAND | ADD

TARGET PRICE: $2.88

MARCH 20 CLOSE: $2.14

CGS-CIMB Securities, March 19

GuocoLand on Monday announced it has, with Intrepid Investments and Hong Realty, successfully tendered for the collective sale of the Pacific Mansion condominium site.

The deal follows the success of the nearby Martin Modern launch and underlines the developer's confidence and optimism on the Singapore private residential market outlook.

In addition, it would extend GuocoLand's residential development income visibility. We think the project could likely be launch-ready only from 2019.

Assuming an average selling price of $2,700 psf, this project could add another four cents to GuocoLand's current revalued net asset value (RNAV) of $3.84.

We continue to like GuocoLand for its attractive valuations and high recurrent income base. The stock is trading at a 46 per cent discount to RNAV and offers 39 per cent upside to our target price of $2.88.

A potential re-rating catalyst could come from rising average selling prices for its projects, while downside risk could be a slower-than-expected recovery in the Singapore office and residential markets.

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