Freelance Research Analyst

Tay Hock Meng

Equity Bottom-Up

<p>On April 15, 2016, Business Times (BT) published an article entitled <a href="http://www.businesstimes.com.sg/companies-markets/guocoland-attractive-candidate-for-privatisation-amended" target="_blank">“GuocoLand attractive candidate for privatisation”</a>, the author described GuocoLand Group as an undervalued company with its huge asset portfolio of close to $3.7 billion on a net basis, and a book value of $3 per share. The author concluded by indicating that there could be a possibility that its principal shareholder, Mr. Quek Leng Chan might step in with an offer of around $2.50 per share as estimated by the BT author.</p><p> However, we think that potential investors might want to also get a second opinion through using discounted cash flow (DCF) analysis, given the latest run-up in shares from the $1.80 per share as the BT author had noted on the day when the story was published to around $1.94 recently on April 18. We also think that the GuocoLand’s stock price might have gotten ahead of itself, as our DCF analysis shows a value of close to $1.89 per share. This might suggest a potential overvaluation of the stock price at current levels.</p>

On April 15, 2016, Business Times (BT) published an article entitled “GuocoLand attractive candidate for privatisation”, the author described GuocoLand Group as an undervalued company with its huge asset portfolio of close to $3.7 billion on a net basis, and a book value of $3 per share. The author concluded by indicating that there could be a possibility that its principal shareholder, Mr. Quek Leng Chan might step in with an offer of around $2.50 per share as estimated by the BT author. However, we think that potential investors might want to also get a second opinion through using discounted cash flow (DCF) analysis, given the latest run-up in shares from the $1.80 per share as the BT author had noted on the day when the story was published to around $1.94 recently on April 18. We also think that the GuocoLand’s stock price might have gotten ahead of itself, as our DCF analysis shows a value of close to $1.89 per share. This might suggest a potential overvaluation of the stock price at current levels.

GuocoLand

Is GuocoLand a Prime Takeout Candidate