GuocoLeisure

SGX Rules do NOT protect minoritY from EXPLOITATION by MajoritY. Keppel Bank's takeover was a Really Really Really Really SAD story for its Anticipated Shareholders. So was the privatisation of CK TANGS Now, there is the pending Exploitation of CHEMOIL shareholders too. The BURNING QUESTION???? Will GuocoLeisure shareholders be EXPLOITED by its privatisation????

Dello wrote:

GuocoLeisure - could it be a gem or a multibagger? I like Sebastian Chong\'s views as posted yesterday in his website shareowl.com where he believes Quek Leng Chan is going to privatise the company.

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If future outlook is not great, QLC would not be buying -- not even at 61 cents. CDL Hosp Trust just bought 5 Australian hotels totalling over 1,000 rooms for just A$175. Their replacement cost is much more than double the purchase price.

Likewise, the replacement cost of the London and other UK hotels of GuocoLeisure is likely to be much more than their book values and the current market value of the oil and gas concession at Bass Strait is very much more than its book value. And yet the book value per share is US 75 cts as compared with the current share price of S$0.62.

QLC never (or very seldom) over-pays for his acquisitions. And he and his uncle was smart enough to convince DBS and Jackson Tai etc that Dao Heng Bank in HK was worth 3.3 times book value.

DH Bank's net asset value was 3.3 billion SGD and the goodwill paid was 6.7 billion SGD. Well, time will tell. QLC has the incentive to privatise GuocoLeisure before the STI runs up to over 3,000 so that he need not offer more than 90 cts to succeed. In 2005, he offered 1.20 in a more bullish market but only managed to secure slightly over 50% stake in GuocoLeisure. When 2012 comes with the London Olympics and probably much higher oil price than now, he may be able to sell off 100% of GuocoLeisure at well over SGD 2.00. Another repeat of his Dao Heng Bank saga.

Very strong runup in volume to 22.3 m shares as at 345 pm now. Stock is up 4 cents at 70 cents. What could be brewing in this Quek Leng Chang-controlled stock? Remember that he bought a big chunk recently from a fund, Third Avenue. Maybe soon we will know what he is planning to do with his hotel assets in UK.

I think this time Quek Leng Chan got it v wrong (by buying a stake from Third Avenue). With the European nations going down, and Britain not spared, the hotel industry in UK can only weaken. The euro and british pound are all down and will stay weak - which means the profits of GuocoLeisure, which are booked in USD - will take a hit.

from The Edge:

A filing to the Stock Exchange last month shows Marathon Asset Management as a major shareholder of GuocoLeisure with a stake of over 5%, making the fund the second largest shareholder. GuocoLeisure is controlled by Malaysian billionaire Quek Leng Chan who raised his stake earlier this month to 65.54% through his Hong Kong-listed Guoco Group.

Marathon is known to be an activist shareholder with a very long term investment philosophy based on the "capital cycle" approach (Read our story Will Genting Singapore's sale of UK unit succeed? in this week's issue).

The fund manager has over the years resisted buyout offers, including those for Sembcorp Marine, Great Eastern Holdings and STATS ChipPAC. Today, these companies remain listed. Interestingly, in 2005, Guoco Group made an offer of $1.20 for the 61% of GuocoLeisure shares it did not hold. This year, Guoco Group added 9.5% to its stake, buying over Third Avenue's stake.

GuocoLeisure owns hotels and gaming interests in the UK, hotels in Malaysia, and property in Fiji and the US. As at Mar 31, its NTA stood at 72 cents, and prices are trading at an 11% discount to NTA. In a report on Thursday, Kim Eng Research points out that among its prized assets are 37 Thistle and Guoman Hotels in the UK (of which 16 are owned or leased), as well as the value of its UK casino licences and a 55% interest in the Bass Strait Oil Trust.

In addition, the company owns real estate on two islands in Hawaii (a 53,660-acre land parcel on Molokai Island) and Fiji (Denarau Golf & Racquet Club, Denarau Beach Resort and Port Denarau retail centre). Kim Eng points out that GuocoLeisure has made clear its intention to exit its property businesses in Hawaii and Fiji. The carrying value of the assets was US$179 million ($246 million) or 13 US cents per share as at Mar 31, 2010.

In our view, the proceeds could be returned to shareholders if there is no other investment need, Kim Eng reckons. Before the global financial crisis, GuocoLeisure used to pay a dividend that was as high as 3.5 cents per share. Dividend per share in FY09 was 1.5 cents a share.

Marathon's co-founder is retiring. Wonder what this will mean for its stake in GuocoLeisure.