Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

<p><em><strong>These equity research reports are not written by the SGX.</strong> SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p><p>Initiating Coverage</p>
<h2>GuocoLand Limited</h2>
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<p><strong>Company description<br></strong>GuocoLand Limited (GuocoLand) is a Singapore-listed property company with operations in the geographical markets of Singapore, China, Malaysia and Vietnam. The principal business activities of GuocoLand and its subsidiaries (the Group) include property development, property investment, hotel operations and property management. The Group’s portfolio comprises of residential, hospitality, commercial, retail and integrated developments spanning across the region.</p>
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<p><strong>Summary<br></strong>GuocoLand’s share price generally rose in 2019 on the back of strong financials in the first half of FY2020, albeit weaker performance for overall FY2019. Owing to the COVID-19 pandemic, however, the company’s share price has dipped since the start of 2020 but has rebounded slightly from a low of S$1.22 on 19 March. Despite softened rents, hotel occupancy and RevPAR, and potentially lower demand for new property purchases, we are expecting a robust performance for FY2020 on the back of a strong first half. Looking ahead, there are potential catalysts such as the company’s new mixed-use developments in Singapore and China. Further, there is upside to the Singapore market as a safe-haven location for property investment, which could underpin development sales.</p>
<p><strong>Recommendation<br></strong>Based on our valuation analysis, we estimate that GuocoLand is trading at a steep discount to book value. The discount is 59.0%, which could imply that the company is undervalued at the current price. This is reinforced by a peer comparison which shows that GuocoLand’s P/B ratio of 0.41x is lower than the peers’ average P/B of 0.61x. We adopt a relative valuation method to derive an estimated target price of S$2.10 per share if GuocoLand’s P/B were to re-adjust to the current peers’ average benchmark of 0.61x. Our target price implies a 50.0% upside from the current price of S$1.40 and is a 38.8% discount to book value of S$3.43 as of 31 December 2019. We also note that GuocoLand is attractive in terms of dividend yield, with a dividend yield of 5.00% that is higher than the peers’ average of 3.38%. We issue a buy recommendation and our target price is S$2.10.</p>
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These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.Initiating Coverage
GuocoLand Limited


Company description GuocoLand Limited (GuocoLand) is a Singapore-listed property company with operations in the geographical markets of Singapore, China, Malaysia and Vietnam. The principal business activities of GuocoLand and its subsidiaries (the Group) include property development, property investment, hotel operations and property management. The Group’s portfolio comprises of residential, hospitality, commercial, retail and integrated developments spanning across the region.

Summary GuocoLand’s share price generally rose in 2019 on the back of strong financials in the first half of FY2020, albeit weaker performance for overall FY2019. Owing to the COVID-19 pandemic, however, the company’s share price has dipped since the start of 2020 but has rebounded slightly from a low of S$1.22 on 19 March. Despite softened rents, hotel occupancy and RevPAR, and potentially lower demand for new property purchases, we are expecting a robust performance for FY2020 on the back of a strong first half. Looking ahead, there are potential catalysts such as the company’s new mixed-use developments in Singapore and China. Further, there is upside to the Singapore market as a safe-haven location for property investment, which could underpin development sales.
Recommendation Based on our valuation analysis, we estimate that GuocoLand is trading at a steep discount to book value. The discount is 59.0%, which could imply that the company is undervalued at the current price. This is reinforced by a peer comparison which shows that GuocoLand’s P/B ratio of 0.41x is lower than the peers’ average P/B of 0.61x. We adopt a relative valuation method to derive an estimated target price of S$2.10 per share if GuocoLand’s P/B were to re-adjust to the current peers’ average benchmark of 0.61x. Our target price implies a 50.0% upside from the current price of S$1.40 and is a 38.8% discount to book value of S$3.43 as of 31 December 2019. We also note that GuocoLand is attractive in terms of dividend yield, with a dividend yield of 5.00% that is higher than the peers’ average of 3.38%. We issue a buy recommendation and our target price is S$2.10.



Non-SGX Report: Initiating Coverage: GuocoLand Limited