GuocoLeisure has staged a convincing breakout above the 0.900 to 0.92 resistance level yesterday. It is now at a 5 years high - was below this level since Jan 2008. More upside possible on this clear breakout. Short term target at 1.00 currently and after that it can surge much higher to find new resistance. More of a longer term value play as seen in UOBKH research report dated 1st April 2013 below. Immediate support is at 0.95 for short term play. Will most likely consolidate from 0.95 to 1.00 range before attempting to find a new direction. Note that high in 2007 was around the 1.80 level. Stop loss below 0.89 level for short term trades.
UOBKH (1st April 2013) : GuocoLeisure (GLL SP, B16) –
Increased visibility of undervalued hotel portfolio
Last price: S$0.88
Target Price: S$1.19
We initiated coverage on GLL with a BUY recommendation on
the back of an optimistic outlook for UK’s tourism, which should
support demand for the company’s 37 hotels there. Despite
being one of the UK’s largest hotel operators, GLL continues to
trade at a steep discount to book value. We believe an
independent valuation report that will be released by end-April
should increase its visibility and highlight its undervalued
assets. Another potential catalyst could come in the form of its
strategy repositioning exercise where we expect management
to move its focus to Asia. We have a SOTP-based target price of
S$1.19. GLL is trading at a forward PE of 13.7x.
The stock has gapped up and it is preferred that prices close
above S$0.885 for further upside towards S$1.05. Support
could be found at S$0.79.
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