Excerpts from DBS report
Analysts: Woon Bing Yong & Derek Tan
| Raising TP as Gultech IPO progresses |
INVESTMENT THESIS
Key Arguments:
• Potential IPO of GulTech to crystallise hidden value.
The sale of a stake in GulTech to strategic partners is projected to bring in substantial returns while sales at its residential projects could deleverage its balance sheet to a more conservative 0.6x by FY22, in our estimates. As the potential IPO nears, we raise our TP to S$0.66 as we repeg our valuation multiple for GulTech to 16x FY22F PE, still a conservative valuation considering GulTech’s peers trade at over 20x FY22F PE.  • Transformation into partial tech play in progress. GulTech’s earnings have grown by a CAGR of 17.7% in the past five years. While Tuan Sing’s effective interest in GulTech Jiangsu will fall to an estimated c.38% after the divestment to the strategic partners, GulTech’s earnings growth may accelerate with help from its partners. • Resilient property market. The Singapore private property market has held up well amid the pandemic, and a successful sales launch of Peak Residence could catalyse share price. |
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| SOTP Valuation Our SOTP share price of S$0.66 was based on a combination of RNAV valuation and relative valuation. |