GuocoLand - CIMB Research 2018-03-19: GuocoLand Consortium Buys Pacific Mansion Site

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GUOCOLAND LIMITED F17.SI

Guocoland - Guocoland Consortium Buys Pacific Mansion Site

• Replenishing its Singapore residential land bank with top bid for Pacific Mansion collective sale.
• Transaction could add 4 Scts to RNAV, based on an ASP of S$2,700psf.
• Maintain ADD with Target Price of S$2.88.

Puts in top bid for Pacific Mansion collective sale

• GuocoLand (GUOL) today announced that it has, together with Intrepid Investments and Hong Realty, successfully tendered for the enbloc sale of the Pacific Mansion condominium site. GuocoLand and Intrepid will hold 40% of the development each, and Hong Realty the remaining 20%.
• The price of S$980m is slightly above the site's reserve price of S$938m, and made this transaction the second-largest in the history of Singapore collective sales, in terms of dollar quantum.

Replenishing Singapore residential land bank

• The Pacific Mansion development has a total site area of 128,352 sq ft. According to media reports, the maximum allowable gross floor area works out to be 542,544 sq ft inclusive of a 10% bonus balcony area. This translates to a land price of S$1,806psf of GFA and potential breakeven cost of c.S$2,500psf. 
• This transaction would enable GuocoLand to replenish its dwindling Singapore residential sale pipeline.

Deal could add another 4 Scts to RNAV

• The deal follows the success of the nearby Martin Modern launch and underlines the developers 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 2019F. Assuming an average selling price of S$2,700psf, this project could add another 4 Scts to GuocoLand's current RNAV of S$3.84.

Maintain ADD

• We continue to like GuocoLand for its attractive valuations and high recurrent income base.
• The stock is trading at a 46% discount to RNAV and offers 39% upside to our Target Price of S$2.88. 
• Potential re-rating catalyst could come from rising average selling prices for its ongoing projects while downside risk could be a slower-than-expected recovery in the Singapore office and residential markets.

LOCK Mun Yee CIMB Research | http://research.itradecimb.com/ 2018-03-19

CIMB Research SGX Stock Analyst Report ADD Maintain ADD 2.880 Same 2.880