Background: GuocoLeisure is an investment holding company with interests in hotels (the UK, Malaysia), gaming (the UK), oil and gas (Australia) and real estate (Hawaii, Fiji). It is 66.4%-owned by Hong Kong-listed Guoco Group and ultimately owned by Malaysian businessman Quek Leng Chan’s KLSE-listed conglomerate, Hong Leong Group.
Recent developments: As at 16 September 2011, substantial shareholder Quek Leng Chan, through his holding company Guoco Group, has purchased 2m GuocoLeisure shares at $0.61 per share on average in the latest quarter, pushing his already hefty stake to 66.4%. Institutional shareholder Marathon Asset has also over the past 12 months raised its stake by 1% to 8%.
Key ratios…
Price-to-earnings: 9.9x
Price-to-NTA: 0.7x
Dividend per share / yield: $0.02 / 3.3%
Share price S$0.60
Issued shares (m) 1,368.1
Market cap (S$m) 820.8
Free float (%) 25.6
Recent fundraising Nil
Financial YE June 30
Major shareholders Quek Leng Chan (deemed) - 66.4%, Marathon Asset Mgt - 8.0%
YTD change -17.2%
52-wk price range S$0.56-0.79
Our view Major shareholder Quek Leng Chan bullish on stocks. Mr Quek was quoted in Guoco Group’s 2010 financial report as saying that “we take market corrections as buying opportunities for the accumulation of quality counters. We hold a positive outlook for the Asian economies and build significant positions in strategic long-term investments”. He might have been referring to GuocoLeisure as he has been steadily raising his interest this year, buying 2m shares in September alone at an average cost of $0.61 per share. This brought his already hefty deemed stake to 66.4% (from 65.5% a year ago).
More corporate actions to come? GuocoLeisure is also streamlining its overseas listings, having delisted its London-traded shares in January this year. Currently, its primary listing is in Singapore with a secondary listing in New Zealand. In addition, the company has expressed its intention to exit its property businesses in Hawaii and Fiji. The carrying value of the assets is estimated to be US$178m (US$0.13 per share) as at June 2011.
Still significantly below replacement value. With the general market decline, the stock is trading at 0.7x NTA of US$0.688 per share and is at the lower end of its 52-week trading range. Among its prized assets are the Thistle and Guoman Hotels in the UK, as well as the value of its UK casino licences and a 55.1% interest in the Bass Strait Oil Trust. In addition, it owns real estate on two islands in Hawaii and Fiji.
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