GL Limited (formerly: Guoco Leisure)

Latest news reported that hotel rooms in London are fully booked, even for uncomplete hotels. This is very good to GL as thay have many hotels there.

This one is trading at steep disocunt to its RNAV. Last AGM , the menagement confirmed the value of its hotel portfolio should be more than double of what it has been stated in BS.
But buying interest is rather muted.

GL has a consistent cash cow ; BASS STRAIT OIL ROYALTY. The fee from the royalty was USD39.5 M before financing costs in FY 2011 when oil price was average at USD91.00 per barrel. Now oil price is more than USD100.00 , so royalty fee will be higher for FY 2012.

Revenue from hotel operation will also be higher due to Olympic to be held in London this year.

By the way, how do this BASS STRAIT OIL AND GAS work for GL that GL always earn a royalty fee from them ?
Hope some friends here can help to enlighten. Thanks.

GuocoLeisure is my next target for an offer to be made following Wing Tai. Quek Leng Chan has been accumulating this stock for like the longest time at much higher prices than it currently trades. The stock is also trading at a steep discount to NAV. On top of that, it is thinly traded which is an additional reason for an offer to be made.

(Recently Vested)

its hotel earning would be interesting during Olympic Games in London soon.

I think two years ago, during the AGM it was stated that a percentage (30%?) of the rooms is compulsorily reserved by the authorities at a fixed rate (control rate) for the Olympics. Anyone remember?

It is UK not PRC or other socialist countries, so unlikely has 'control rate' policy. The host country invest in such event and expect economic return from such event.

Will QLC and Martin Currie start sccoping up shares in Guocoleisure soon>?

London Olympics is beneficial to Guocoleisure! Heard their hotel occupancy is already 99% on the week of opening ceremony!

The London Olympics is just days away and celebrations are currently in full swing. One company that is poised to benefit from the event is SGX-listed GuocoLesiure (GLL). GLL, formerly known as BIL International, was once the flagship investment vehicle of famed
Sir Ron Brierley, the corporate raider who grew the company into the largest listed company in New Zealand during the 1980s.

Today, the company has been streamlined with four key investments, namely:
1) hotel operations, with 37 hotels and 8000+ rooms under the Guoman and Thistle brands;
2) royalty entitlement to 2.5% of the value of all hydrocarbons produced in the Bass Straits in Australia,
3) 54,000 acres of land on the Hawaiian island of Molokai,
4) Clermont Leisure, a casino targeted at high rollers.

The Olympics season has resulted in strong trading in London, with YTD Revpar up 7%, driven by a combination of higher rates and increased occupancies. GLL’s 5,000+ hotel rooms in London put it in prime position to benefit from the room demand during the event.

Moreover, the stock is attractively priced on valuation grounds, with an estimated RNAV of S$1.10/share backed primarily by its
hotels and Bass Straits.

On our estimates, these two assets generate more than US$100m in annual cash flows. At current levels, the stock is priced at a
50% discount to its RNAV, with favourable risk-rewards.


Source: DMG

---

By DMG

We use a sum-of-parts valuation methodology to value GLL’s diverse investments and businesses:

1. For the hotel business, we apply a 12x EV/EBITDA multiple on our projected FY6/13 EBITDA of US$92m.

2. We use NPV of future to value GLL’s Bass Straits royalty stream.

Our valuation yields a SOTP of $1.12/share, and applying a 30% holding company discount, we derive a target price of $0.78.

At current levels, the stock offers 35% upside.

We believe our estimates are conservative compared to the stock’s private market value.

In 2005, Guoco Group offered $1.25/share to privatise the company, representing a 116% premium from current price. Trading BUY recommended.

How to explain the steep discount? Just look at Guoco Group share price! Guoco Group MORE UNDERVALUED THAN GUCO LEISURE