GuocoLand

UOBKayhian on 10 Sep 2014

FY15F PE (x): 21.3
FY16F PE (x): 19.1
Resolution of Beijing Dongzhimen project dispute. GuocoLand announced that it had
obtained a favourable judgment following a six-year appeal on the ownership of the
Beijing Dongzhimen project in China. The Hainan High Court has effectively restored
GuocoLand's ownership of its stake in the project, revoking decisions by the Hainan
Haikou Intermediate People's Court and the Industrial and Commercial Administrative
Bureau of Hainan Province.
Litigation overhang removed; RNAV accretion of 34 cents/share (9%). The resolution
dispute removes the long-drawn overhang on the stock. We estimate this could result in
an RNAV accretion of 34 cents/share, or a 8.9% increase in our RNAV estimate to
S$3.30/share. The Beijing Dongzhimen project has a total GFA of 600,000sqm
comprising residential units (9.3%), offices (23.5%), retail space (27%), a hotel (10%),
car parks (17.2%) and a transport hub (13%).
Upgrade to BUY with raised target price of S$2.48 (from S$2.27), pegged at 25%
discount to our raised RNAV of S$3.30/share (from S$3.03) as we factor in the
contribution from the Beijing Dongzhimen project. GuocoLand is trading at a deep 35%
discount to its RNAV.