Excerpts from DBS report

Analyst: Derek Tan / Singapore Research Team

What’s New
• Office fundamentals favourable for completion of Robinson Point sale

Tuan Sing 

Share price: 
30.5 c

Target: 
44 c

• Gultech to extend hot streak and ride semiconductor upcycle

• Resilient Singapore property market a plus for potential launch of Peak Residence

• COVID-19 impact likely priced in; reiterate BUY 

Making a case

Investment Thesis:
Undervalued property play. We maintain our BUY call and TP of S$0.44. Trading at 0.3x P/NAV (between -1SD and -2SD from 3- year mean), we continue to see good value in the stock.

In addition, office fundamentals favour a completion of the S$500m sale of Robinson Point which could drive a re-rating in valuation following improved balance sheet metrics.

Transformation into partial tech play. GulTech’s earnings have grown by a CAGR of 26% in the past five years and may be ripe for unlocking through dividends to Tuan Sing.

Resilient property market. The Singapore private property market has held up well amid the pandemic, a successful sales launch of Peak Residences could catalyse share price.

Valuation:
derek tanDerek Tan, DBS analystOur TP of S$0.44 is based on SOTP. We assume a valuation of 11.0x FY20F PE for Gultech, a 65% discount to RNAV of S$676.8m, and a further 10% conglomerate discount.

The TP represents a P/BV of 0.47x compared to the current P/BV of 0.31x (-1SD below 3-year mean of 0.42x) and peer P/BV of 0.46x.


Where we differ:
We are the only house covering the counter. That said, we have assumed more conservative earnings growth for GulTech.

Key Risks to Our View:
Resurfacing of COVID-19 could lead to construction delays, factory and hotel disruptions, FX risk, soft office market, termination of Robinson Point sale.


Full report here.