GuocoLand increases 14 February 2020

NEWS BITES ASIA - SINGAPORE

GuocoLand Limited (SI:F17), Singapore's 8th largest Real Estate Management and Development company by market cap, has increased 1.0c (0.6%) from its previous trading session to close at SGD1.79. The volume was 0.7 times the average daily trading volume of 245,448 shares. There were 183,100 shares worth SGD327,749 (US$236,006) traded today.

Stock Summary

CurrencySingapore Dollar (SGD) 1 SGD = 0.72 USD
Today's close (SGD)1.79
52-Week Range (SGD)1.8-2.0
SectorReal Estate Management and Development sector
EPS Growth % (y.o.y)352.7
Shares Outstanding1,180,000,000
Market CapSGD2.1 billion (US$1.5 billion)

Highlights in today's Report:

SECTION 1 TODAY'S BULLISH SIGNALS

SECTION 2 TODAY'S BEARISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF SGD1.79):

SECTION 3 THE PAST WEEK

SECTION 4 ONGOING BULLISH PARAMETERS

SECTION 5 ONGOING BEARISH PARAMETERS

SECTION 6 SUMMARY FINANCIALS

SECTION 7 CORPORATE PROFILE

SECTION 1 GUOCOLAND BULLISH SIGNALS

1.1 Undervaluation [compared with sector average]:

Price/Earnings and Earnings Yield

+ Price/Earnings of 8.4. We estimate GuocoLand stock is trading at a current year P/E of 8.8 and a forward year P/E of 9.3. The P/E of 8.4 plus annual inflation in the Singapore of 0.8% adds up to 9.2, well within the value benchmark Rule of 19.

+ Earnings yield of 11.9% is 7.1 times the 10-year bond yield of 1.69%.

Price to Sales

+ Price/Sales of 2.3 [2.8]. We estimate GuocoLand stock is trading at a current year Price/Sales of 2.4 and a forward year Price/Sales of 2.5.

Price to Book

+ Price to Book of 0.5 [0.6]. We estimate GuocoLand stock is trading at a current year Price to Book of 0.4 and a forward year Price to Book of 0.4.

+ The P/E of 8.4 multiplied by the P/NTA of 0.5 is 3.8. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.2. Compared with the rest of the market the stock is undervalued and ranks in the top quartile of stock by value of Q Ratio.

1.2 Undervaluation Indicators and rank of GuocoLand in the Singaporean market:

DescriptionValueRank In Market
* EV/EBITDA22.7In Top 10%
P/E * P/NTA3.78In Top Quartile

* Enterprise value of SGD7 billion is divided by Earnings before interest tax depreciation and amortization of SGD309 million.

1.3 Uptrend:

Past Month:

+ In the past three months the stock has hit a new 52-week high once.

1.4 High Price Performance Indicators and rank of GuocoLand in the Singapore market:

DescriptionValueRank In Market
MCapSGD2.1 billionIn Top Quartile
Today's Trading TurnoverSGD327,749 (US$236,006)In Top Quartile
Volatility %1.1In Top Quartile

Oversold/Bullish Signals:

+ The Relative Strength Index (RSI) of 25.0 has breached the oversold line of 30, suggesting the price decrease of 25.0% in the last 14 days is unusually high.

+ The stock is oversold according to the Williams % R indicator of -85.7, suggesting the price is close to its 14-day low of SGD1.77.

+ The Stochastic indicator of 9.9 has pierced the oversold line of 20; this indicates the price is close to its 14-day low and is likely to revert to an uptrend.

SECTION 2 GUOCOLAND BEARISH SIGNALS

2.1 Cash inadequacy beyond 1 months

+ The Cash Burn of operating activities was SGD754,067,000 in the quarter ended December 31, 2019. This corresponds to an average Cash Burn Rate of SGD478,011,333 per month. To support this Cash Burn Rate, the cash balance of SGD679,967,000 as at December 31, 2019 should be adequate till March 21, 2020.

2.2 Overvaluation [compared with sector average]:

Dividend Yield

+ To quote Benjamin Graham: "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 2.3 times the triple-A bond yield of 1.7%.

+ The relative yield of GuocoLand, defined by its yield of 3.9%, divided by average yield of dividend yielding stocks in the Straits Times Index of 5.2% is 75.2%. This suggests GuocoLand stock is overvalued in dividend yield terms.

2.3 Downtrend:

Price/Moving Average Price and MACD:

+ The Price/MAP of 0.94 for F17 is lower than the Price/MAP for the Straits Times Index of 0.98.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 1.81 minus the 26-day EMA of 1.86 is negative suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.

+ The price to 50-day EMAP ratio is 0.9, a bearish indicator. In the past 50 days this ratio has been under 0.9 just thrice suggesting a support level. The 50-day EMAP has decreased to SGD1.90. A decrease is another bearish indicator.

+ The price to 200-day MAP ratio is 0.94, a bearish indicator. In the past 200 days this ratio has been under 0.94 just thrice suggesting a support level.

Past Week:

+ GuocoLand Limited is placed 241/309 in BuySellSignals' ranking of Singapore performers in the past week, a percentile ranking of 23.

+ In the past week, volume was 1.8 times average and the shares were down 0.6%.

Past Month:

+ The present value of SGD1,000 (PV1000) invested one month ago in GuocoLand is SGD937, for a capital loss of SGD63.

Relative Strength (6 months):

+ In the Singapore market of 362 stocks and 5 units traded today, the stock has a 6-month relative strength of 22 indicating it is trailing 78.0% of the market.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF SGD1.79):

SECTION 3 THE PAST WEEK

3.1 Snapshot: GuocoLand stock was down 1.0c or 0.6% in the past week. Volume in the week was 1.8 times average trading of 1.2 million shares. It underperformed the Straits Times Index in 5 out of 5 days. The price ranged between a low of 1.78 on Thursday, Feb 13 and a high of 1.8 on Wednesday, Feb 12.

DayGuocoLandClose price [SGD]Price change %Relative change %Comment
ThursdayUnderperforms 91% of the market1.78-1.1-1.0VI*=2.7
WednesdayRises 1.7% from 14-day low1.81.1-0.2Week-high of 1.8 Top Rise; VI*=2.2
TuesdayConsolidates after 2 days of consecutive falls1.780-0.4VI*=3.1
MondayDrops to year low1.78-1.1-0.5Price/MAP200 below 1 and falling
FridayUnderperforms 90% of the market1.8-1.6-0.1Steepest Fall; VI*=1.2

[Volume Index (VI); 1 is average]

3.2 Volatility:

+ GuocoLand is at a discount of 12.7% to its 12-month high of SGD2.05 on November 19, 2019. It is also at a premium of 1.2% to the 12-month low of SGD1.77 on March 12.

SECTION 4 ONGOING BULLISH PARAMETERS

4.1 Performance:

+ Return on Equity 6.2% [6.1%].

+ Return on Assets 2.9% [2.5%].

+ Net profit margin has averaged 35% in the last 3 years. This is considered superior and suggests a high margin of safety.

4.2 High Performance Indicator and rank of GuocoLand in the Singaporean market:

DescriptionValueRank In Market
EBITDA Margin %33.3In Top Quartile

4.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 8.2%. The Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in F17 would have produced a return of 3.5%.

F17Close (SGD)Dividends (SGD)Capital Gain / (Loss) %% YieldAnnual Return %
Feb 141.790.07(0.4)3.93.5
1 Yr ago1.80.07(7.0)3.6(3.3)
2 Yrs ago1.930.0713.34.117.4
3 Yrs ago1.710.0915.76.121.8
4 Yrs ago1.470.05(1.7)3.31.7

Close 5 years ago SGD1.50

4.4 Increased ADVT past five years

Avg. Daily Volume Traded 12 months ended Feb 14, thousand shares

YearADVT
2020245.4
2019424.2
2018682.7
2017226.7
2016153.2

In the past five years, Average Daily Volume of Trading (ADVT) has increased 60.2% to 245,448 shares.

4.5 Increased VWAP

Past five years, 12 months ended Feb 14 (SGD)

YearHigh PriceVWAPLow Price
20202.051.941.77
20192.081.851.61
20182.241.91.63
20171.761.681.47
20162.061.71.46

In the past five years Volume Weighted Average Price (VWAP) has increased by 14.5% to SGD1.94. Based on a dynamic start date of five years ago, there have been declines in VWAP in 2 out of 5 years.

4.6 Increased Average Daily Turnover

Past five years, 12 months ended Feb 14 (SGD thousand)

YearAverage Daily Turnover
2020475.5
2019777.4
20181300.2
2017384.4
2016250.7

In the past five years, average daily share turnover has increased 89.7% to SGD475,496 (US$342,395). This suggests increased liquidity.

4.7 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 5.95% (or a turnover period of 16 years 9 months). The average length of ownership of the stock is 6.3 times the average holding period of 2 years 7 months for stocks in the Straits Times Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 5 ONGOING BEARISH PARAMETERS

5.1 Performance:

+ Return on Capital Employed 3.3% [6.1%].

5.2 Growth:

Quarterly Trend in Revenue, Net Profit and Net Profit Margin:

+ Net Profit margin is positive but falling in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit GrowthNet Profit Margin
Dec 19 [Q2]9.9-37.38.8
Sep 19 [Q1]--15.8

5.3 High Debt Indicators:

+ The debt to equity ratio of 96.7% is above a safe benchmark figure of 70%. However, it has improved in the past four years.

+ Total Liabilities/EBITDA of 17.4 compares unfavourably with the Joseph Piotroski benchmark of 5.

DescriptionValueRank In Market
Debt to Equity1.0In Bottom Quartile

SECTION 6 GUOCOLAND SUMMARY FINANCIALS

6.1 Dividend History

Trailing 12 months dividend for the 12 months ended February 14 has improved from 5.0c in 2016 to 7.0c in 2020.

6.2 Financials Summary

Year endedJun 2019Jun 2018Jun 2017
Sales (USD M)667.5822.1801.6
Pretax (USD M)222.5348.6328.2
Net (USD M)184.1297.5257.2
EPS (SGD)0.2130.36530.3219

+ Net profit was down 38.1% from US$297.5 million in 2018 to US$184.1 million in 2019.

+ Earnings Per Share (EPS) was down 41.7% from 36.53c to 21.30c.

6.3 Quarterly Report: Key Parameters

Quarterly Report Analysis Q2 2019: GuocoLand EPS falls 17%


Release Date: January 17, 2020

GuocoLand (SI:F17), announced EPS of 2.49c (US1.85c) for the quarter-ended 31 December 2019, down 17% from 3.0c (US2.17c) in the previous quarter.

Sequential Quarter comparison

Quarter on QuarterDec 31, 2019Sep 30, 2019Dec 31, 2019Sep 30, 2019Change
DescriptionSGD mSGD m$US m$US m(%)
EBIT33.354.124.739.2Down 38.5
Pre Tax Profit/(Loss)33.354.124.739.2Down 38.5
Profit/(Loss) after Tax26.442.119.630.5Slumped 37.3
Net Assets4,687.24,6663,479.93,377.5Steady

Per Share figures

Dec 31, 2019Sep 30, 2019Dec 31, 2019Sep 30, 2019Change (%)
DescriptionSGD SGD $US $US
EPS(2.5c)3c(US1.8c)US2.2cDown 17
    EPS Growth Factor*2.19    

* EPS Growth Factor = Net Profit growth / EPS growth

Corresponding Quarter comparison

Year-on-Year [December 31]2019201820192018Change
DescriptionSGD mSGD m$US m$US m(%)
Profit/(Loss) after Tax26.47.419.65.4Up 256.5
Net Assets4,687.24,642.53,479.93,401.6Steady

Per Share figures
December 312019201820192018Change (%)
DescriptionSGD SGD $US $US
EPS2.5c0.5cUS1.8cUS0.4cUp 352.7

* EPS Growth Factor = Net Profit growth / EPS growth

Major changes compared with previous corresponding period [Year-on-Year]:

Favourable Changes:

- Net profit up 256.5% from SGD7.4m ($US5.4m) to SGD26.4m ($US19.6m)

- Total revenue up 109.6% from SGD142.9m ($US104.7m) to SGD299.6m ($US222.4m)

- EBIT to Revenues up from 0.7% to 11.1%

- Profit before tax to Revenues up from 0.7% to 11.1%

- Profit after tax to Revenues up from 5.2% to 8.8%

Currency Conversion (December 31, 2019): $US1 = SGD1.35

Currency Conversion (December 31, 2018): $US1 = SGD1.36

6.4 Annual Report: Key Parameters

FY2019 Annual Report: GuocoLand profits hit by 38.1% fall


Release Date: October 24, 2019

GuocoLand (SI:F17) reported net profit for the year-ended 30 June 2019 of SGD256m ($US189m), down 38.1% from SGD413m ($US303m) in the previous year. Earnings per share (EPS) were down 41.7% from 37.0c (US27.13c) in FY2018 to 21.0c (US15.52c) in FY2019.

Major changes compared with previous year:

Favourable Changes:

- Debt to Equity down 10.2% from 1.1 to 1.0

- Total liabilities to Total assets down 3.6% from 0.6 to 0.5

- Working capital to total assets up from 22.0% to 34.3%

- Long-term investments to Total Assets up from 44.4% to 48.6%

- Net tangible assets per share up 2% from SGD4.1 ($US3) to SGD4.18 ($US3.1)

Unfavourable Changes:

- Net profit slumps 38.1% from SGD413.2m ($US303.0m) to SGD255.7m ($US189.0m)

- Total revenue down 18.8% from SGD1.1b ($US837.2m) to SGD927.0m ($US685.2m)

- EBIT Margin down from 42.4% to 33.3%

- EBIT to total assets down from 4.6% to 3.1%

- Profit before tax to Revenues down from 42.4% to 33.3%

- Administration expenses to Revenues up from 7.9% to 10.1%

- Total current assets to Total Assets down from 40.8% to 39.7%

- Total Liabilities to EBITDA of 17.4 compares unfavourably with the Joseph Piotroski benchmark of <5. This ratio has deteriorated by 44% from the previous year's ratio of 12.1.

- Total Liabilities to Operating Cash Flow of 16.8 compares unfavourably with the Joseph Piotroski benchmark of <4. However, it has improved by 34% from the previous year's ratio of 25.4.

Note:

- Cost of Goods Sold to Revenues down from 69.2% to 68.1%

- Total non-current assets to Total Assets up from 59.2% to 60.3%

- Current Inventory to Total Assets up from 27.4% to 29.7%

- Fixed Assets to Total Assets steady at 5.9%

Annual Report [Year-on-year comparison: 2019 vs 2018]

Company Name : GuocoLand Limited (F17)
June 302019201820192018Change
DescriptionSGD mSGD m$US m$US m(%)
Total Revenue9271,141.7685.2837.2Down 18.8
EBITDA309484228.4355Down 36.2
EBIT309484228.4355Down 36.2
Pre-Tax Profit/(Loss)309484228.4355Down 36.2
Profit/(Loss) after Tax255.7413.2189303Slumps 38.1
Working Capital3,436.32,290.12,540.11,679.4Up 50.1
Current Assets3,987.24,247.62,947.33,114.9Down 6.1
Current Liabilities550.91,957.6407.21,435.5Down 71.9
Shareholders' Funds4,231.64,1643,1283,053.6Up 1.6
Total Liabilities5,388.95,8623,983.44,298.8Down 8.1
Total Assets10,031.410,420.57,415.17,641.6Down 3.7
Current Debt285.41,6322111,196.8Down 82.5
Non-Current Debt4,204.43,291.83,107.82,414Up 27.7
Total Debt4,489.84,923.83,318.83,610.7Down 8.8
Operating Cash Flow321.5231237.6169.4Up 39.2
Net Assets4,642.54,558.53,431.73,342.8Up 1.8
Net Tangible Assets4,642.54,558.53,431.73,342.8Up 1.8
AuditorKPMG LLP 

Year-on-year comparison of Per Share figures

June 302019201820192018Change (%)
DescriptionSGD SGD $US $US
EBIT27.8c43.6 cUS20.6cUS32cDown 36.2
EBITDA27.8c43.6 cUS20.6cUS32cDown 36.2
Cash74.2c79.6 cUS54.9cUS58.4cDown 6.8
Shareholders' Funds3.83.82.82.8Up 1.6
Total Liabilities4.95.33.63.9Down 8.1
Total Assets99.46.76.9Down 3.7
Non-Current Debt3.832.82.2Up 27.7
Total Debt44.433.3Down 8.8
Net Tangible Assets4.24.13.13Up 2

Year-on-year comparison of Performance Ratios

June 3020192018Change (%)
Total Liabilities/Total Assets0.50.6Down 3.6
Common Size Ratios by Assets %
Total non-current assets to Total Assets 60.3 59.2 Up 1.8
Long-term investments to Total Assets 48.6 44.4 Up 9.5
Total current assets to Total Assets 39.7 40.8 Down 2.6
Current Inventory to Total Assets 29.7 27.4 Up 8.3
Fixed Assets to Total Assets 5.9 5.9 Down 0.5
Common Size Ratios by Revenues %
Cost of Goods Sold to Revenues 68.1 69.2 Down 1.6
Profit before tax to Revenues 33.3 42.4 Down 21.5
Administration expenses to Revenues 10.1 7.9 Up 27.2
Tax expenses to Revenues (2.3) (5.4) Up 57.3

Currency Conversion (June 30, 2019): $US1 = SGD1.35

Currency Conversion (June 30, 2018): $US1 = SGD1.36

Five-year record of growth and performance:

In the last 5 years Total Revenue averaged SGD1,343.2M ($US992.9M), EBITDA averaged SGD495.5M ($US366.3M) and Net Profit averaged SGD441.1M ($US326.1M). Compound Annual Growth Rate (CAGR) averaged -9.5% for Total Revenue, -3.4% for Net Profit and -9.3% for EBITDA.

DescriptionAnnual (SGD M)Annual ($US M)5-year Avg (SGD M)5-year Avg ($US M)5-year CAGR %
Total Revenue927685.21,343.2992.9(9.5)
EBITDA309228.4495.5366.3(9.3)
Operating Profit309228.4492.8364.2(9)
Net Profit255.7189441.1326.1(3.4)

Five-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2019 Net Profit Margin of 31.0% was below its 5-year Avg of 37.0% (All Figures in %)

Description20195-year Avg
EBITDA Margin33.341.8
Operating Profit Margin33.341.6
Net Profit Margin3137
Return on Equity6.210.6
Return on Assets2.94.4
Return on Capital Employed3.36.6

SECTION 7 CORPORATE PROFILE

7.1 Activities

GuocoLand Limited is an investment holding company. Its segments comprised: GuocoLand Singapore, which is engaged in the development of residential properties and property investment (holding properties for rental income) in Singapore; GuocoLand China, which is engaged in the development of residential, commercial and integrated properties and management and operation of hotels in China; GuocoLand Malaysia, which is engaged in the development of residential, commercial and integrated properties, management and operations of hotels and operations of palm oil estates and sale of fresh fruit bunches in Malaysia, and GuocoLand Vietnam, which is engaged in the development of residential, commercial and integrated properties in Vietnam.

7.2 Issued Capital and MCap

Based on 1,180,000,000 issued shares the market capitalisation is SGD2.1 billion (US$1.5 billion).

COMPANY IDENTIFIERS

Contact: 65 65356455

Physical Address: 20 Collyer Quay #20-01 Tung Centre Singapore, 049319 Singapore

State/Province/Country: Singapore

Country of Incorporation: Singapore

Exchange: Stock Exchange of Singapore

Business Sector: Real Estate

Industry Group: Real Estate Operations

Activity: Real Estate Development & Operations - NEC*

Economic Sector: Financials

* NEC: Not elsewhere classified

ISIN: SG1R95002270

SI:F17; SGX:F17; SP:F17; GUOC.SI

PermID: 4295887758

RIC: GUOC.SI

Guocoland, Guocoland Ltd

Source: www.BuySellSignals.com