Excerpts from DBS report

Analysts: Woon Bing Yong & Derek TAN 

What’s New
• FY21 PATMI up 41.8% y-o-y to S$83.7m as Robinson Point sale closes

Tuan Sing 

Share price: 
$0.40

Target: 
$0.63

• Australia reopening to drive Hospitality recovery

• GulTech stake sale completes, primed for potential IPO in 2023

• Maintain BUY with slightly lower TP of S$0.63

Positioning for its future
Investment Thesis:
Potential IPO of GulTech to crystallise hidden value. Since our initiation back in June 2020, Tuan Sing’s share price has risen c.100%.

We still see upside with a few catalysts ahead. The sale of a stake in GulTech Jiangsu to strategic partners could position the unit for an IPO while potential redevelopments at Grand Hyatt Melbourne and Link@896 could lift NAV.

Transformation into partial tech play in progress. GulTech’s earnings have grown by a CAGR of c.16% in the past five years.

PCB gultechIn FY21, GulTech Jiangsu embarked on its first steps towards a public
listing, making strategic stake sales to private equity partners and local authorities totalling 17.5% of shares
outstanding.

While Tuan Sing’s share of profit in GulTech could decline to a forecasted S$24.0m due to the partial stake sale, GulTech’s earnings growth may potentially accelerate further with help from its partners.

Resilient property market. The Singapore private property market has held up well amid the pandemic, and a successful sales launch of Peak Residence could catalyse share price.

Valuation:
Our TP of S$0.63 is based on SOTP. We assume a valuation of 16.0x FY22F PE for GulTech, a 60% discount to RNAV of S$937.5m.

Our TP represents a P/NAV of 0.60x compared to 0.43x currently.


Where we differ:
We are the only broker covering the counter. That said, we have assumed more conservative valuations for Tuan Sing and with a 60% discount to RNAV.

Key Risks to Our View:
Resurgence of COVID-19 infections could lead to construction delays, factory and hotel disruptions, FX risk, soft office market.


Share Prices

Counter NameLastChange
AEM Holdings3.810-0.040
Avi-Tech Electronics0.275-
Best World1.770-0.010
Broadway Ind0.118-
China Sunsine0.405-
DISA0.003-
Food Empire0.655-0.005
Fortress Minerals0.330-
Geo Energy Res0.365-
Golden Energy0.7800.005
GSS Energy0.046-
InnoTek0.470-
ISDN Holdings0.400-0.005
ISOTeam0.100-
IX Biopharma0.1270.001
Jiutian Chemical0.0780.001
KSH Holdings0.345-
Leader Env0.056-0.002
Medtecs Intl0.1430.001
Meta Health0.025-0.001
Nordic Group0.4800.005
Oxley Holdings0.149-
REX International0.2400.005
Riverstone0.645-
Sinostar PEC0.170-
Southern Alliance Mining0.380-0.060
Straco Corp.0.405-
Sunpower Group0.260-
The Trendlines0.088-
Totm Technologies0.105-0.002
UG Healthcare0.1960.001
Uni-Asia Group0.825-0.010
Wilmar Intl4.1200.020
Yangzijiang Shipbldg1.4100.010

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