Excerpts from analyst reports

RHB Research raises target price of Hiap Hoe on sale of Ibis Novena


Analyst:
Goh Han Peng

DaysHotel_taxiTourist arrivals at Days Hotel, which opened a few months ago, on Balestier Road. NextInsight file photoAccording to the media, Ibis Novena, located at the corner of Balestier and Irrawaddy roads, was recently sold by the Kum family, who last year was exploring the flotation of a hospitality trust that was subsequently called off. The transaction amount of S$150m for the 241-room 3-star hotel translated to per key valuation of S$622,000.
 

The biggest hospitality player in the Balestier enclave is currently Hiap Hoe (HH)/Superbowl, who between them own 2 hotels, the 405-room Days Hotel and the 384-room Ramada Singapore, together with some 120,000 sf of commercial space at Zhongshan Park. Days Hotel is currently operational while Ramada Singapore is expected to commence business in 1H13. 

Valuation upgrade for hotel assets. We have previously valued Ramada Singapore at S$600,000/key and Days Hotel at $500,000 per key. With the latest transaction and taking into account recent valuations by other hospitality operators, we now raise our valuation to S$650,000/key for Ramada and S$550,000/key for Days Hotel. This translates into a valuation uplift of S$18m, or 4cts/share, for HH. 

Healthy presales and low land cost mitigate residential headwinds. While we expect the recent round of cooling measures to impact on HH’s residential sales, its two major projects, Skyline 360° and Waterscape at Cavanagh, are currently 64% and 75% sold, respectively, with healthy pretax margin of over 40%. We have revised our development surplus estimate from S$220m to S$156m, primarily due to further sale recognition on presold projects and a longer sale period assumed for unsold units. 

Raising TP to S$0.79. Our RNAV for the stock now stands at $1.32/share. We reduced our discount from 50% to 40% given the higher commercial property weighting and limited residential exposure given healthy presales. Our TP of S$0.79 offers 26% upside. Buy maintained.

Recent article: 
First hotel of HIAP HOE & SUPERBOWL opens in Balestier

 



guocoleisure_hotel1Out of the 8,280 rooms in UK that GuocoLeisure operates, 5,110 rooms are in London. The company operates under two hotel brands, namely, Guoman and Thistle. Photo: Company


UOB Kayhian highlights catalysts for Guocoleisure


Analyst: Loke Chunying

Properties held at deep discount to book value. GLL carries its hotels and property, plant and equipment at historical cost less accumulated depreciation. According to management, the last revaluation date was in 2005.

With an independent valuation report of GLL’s assets likely to be issued in the near term (due to privatisation of Guoco Group, the ultimate holding company of GLL), we believe it will shed light on the highly undervalued property portfolio.

GLL is trading at an attractive valuation at 0.69x FY12 P/B. 

We believe the independent valuation report on GLL’s  assets will highlight GLL’s undervalued property portfolio to the market that will serve as a short-term price catalyst.

• Steady income stream from oil and gas royalty and its market leader position in London’s hotel operation also make GLL an attractive investment to value investors.

• We believe the current depressed valuation is due to the lack of market exposure by GLL. With recent news about the privatisation of GLL’s parent Guoco Group and plans to set up a hotel in Singapore, we believe there will be an increase in investor interest in the stock.

The stock has
already seen an increase in volume since the start of the year.

Recent article: 
GUOCOLEISURE: Possible revaluation exercise with positive outcome

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