Over the last couple of years, GuocoLand Malaysia has sold assets such as Eco-World International and the Thistle Johor Bahru hotel. However, it is still holding to a "significant" landbank in Malaysia that will come in useful to line its development pipeline.
"We hope that the group is taking steps to value unlock for all shareholders and we remain positive on the stock," says DBS, noting that GuocoLand remains supported by its twin engines of growth and positioning as a quality EQDP-beneficiary in the near-term.
On Feb 3, GuocoLand, via its GLL (Malaysia), has tabled an offer to privatise GuocoLand (Malaysia) Berhad via a selective capital reduction and repayment exercise.
Under this offer, the remaining 32% of the shareholders will receive RM1.10 per share, which is a 17.65% premium to GLM’s last traded price and a 47.73% premium to its 6-month volume-weighted average price.
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DBS figures that this deal will be accretive for GuocoLand at around 0.5x P/B, given how itself is trading at 0.7x P/B.
In addition, GuocoLand (Malaysia) holds around RM197 million of cash, implying a funding shortfall of only RM 72 million, or $23 million, which in DBS's view, is "immaterial".
DBS has maintained its "buy" call and $3.30 target price, pegged to a 35% discount to its RNAV estimate.
GuocoLand shares last traded at $2.68.
