GuocoLand Limited (“GuocoLand”) plans on issuing a new 3-year SGD senior unsecured bonds at the initial price guidance (“IPG”) at 3.50%. The new issuance is expected to be issued on 15 November 2024, with a maturity date of 15 November 2027. GuocoLand indicated that the net proceeds will be used for the financing of general working capital, as well as corporate requirements of the Group. Do note that the new issuance will be made available to accredited and institutional investors only.
GuocoLand and its subsidiaries are a leading real estate group with operations in Property Investment (“PI”) and Property Development (“PD”), with the bulk of its assets predominantly held for investment (~70%). The Group’s investment properties are located across its key markets of Singapore, China, and Malaysia, valued at a total of SGD 6.56b as of 30 June 2024. GuocoLand is a subsidiary of Guoco Group Limited, which is a member of the Hong Leong Group.
For the full year ended 30 June 2024 (“FY24”), GuocoLand saw revenue improve by +18% year-on-year – up from SGD 1.54b in FY23 to SGD 1.82b in FY24 owing to higher contributions from both Property Development and Property Investment. The Property Investment and Property Development segments saw +35% and +16% YoY growth respectively, contributed by higher recurring rental revenue from the Guoco Midtown project, and higher progressive recognition of residential sales in Singapore.
While the operating profit increased by +13% YoY, profit before taxes fell by a significant -47% YoY – down from SGD 325m in FY23 to SGD 171m in FY24. The sharp drop was a result of an increase in net finance costs (+67% YoY), while the fair value gains on investment properties had been lower in FY24 (FY23: SGD 156m vs FY24: SGD 40m).
Despite the fall-off in its latest performance, we remain largely confident of GuocoLand’s earnings as its stable recurring income grows further. GuocoLand has increasingly focused more on its Property Investment, with a reported 18% CAGR for its recurring revenue since FY17. Additionally, GuocoLand’s various investment properties continue to see high occupancy rates, with the latest Lentor Modern retail mall planned for opening only in 2026, already 41% leased as of June 2024.
GuocoLand’s credit profile stood mostly stable against the previous year. Total borrowings increased slightly from SGD 5,114m in FY23 to SGD 5,267m, but its debt-to-total assets remained at 0.43x across both years. The majority of GuocoLand’s borrowings are secured at about 72%, pledged using its assets (across PPE, investment and development properties) amounting to SGD 8,078m.
GuocoLand has current borrowings of SGD 2,237m, but we anticipate minimal issues with GuocoLand’s ability to refinance its borrowings, given the usage of secured borrowings and its available assets for pledging. Meanwhile, we also noted that GuocoLand’s cash and cash equivalents have increased from SGD 879.5m in FY23 to SGD 974.2m in FY24, which would help with providing that temporary liquidity for its refinancing of borrowings.
Table 1: GuocoLand’s SGD issuances and other comparable papers
Issue | Ask Price | Yield to Maturity | Years to Maturity |
GUOLSP 15Nov2027 Corp (SGD)* | 100.00* | 3.50%* | 3.00 |
99.90 | 3.34% | 1.97 | |
101.45 | 3.46% | 2.58 | |
101.40 | 3.99% | 3.73 | |
100.20 | 3.54% | 0.98 | |
100.85 | 3.51% | 1.50 | |
99.98 | 4.00% | 4.93 | |
Sources: Bondsupermart, iFAST Compilations. Data as of 5 November 2024. *Yet to be issued and might see a downward adjustment in its final pricing | |||
GuocoLand is unrated, while the new issue is expected to be unrated as well. We currently see limited appeal in the new issuance by GuocoLand, especially with the downward adjustment in the final price guidance. We expect the new issuance to be fairly priced against other GuocoLand issues, with the exception of the 2028 paper (which might see a lower ask price owing to the lack of liquidity).
Investors who are interested in the real estate sector may opt for other choices, especially our continued recommendations of STRTR 3.750% 29Oct2025 Corp (SGD) and STRTR 4.100% 04May2026 Corp (SGD) – both being great options in the short-duration space. We have recently covered Straits Trading Company’s 1H24 results, with the full article available here: Idea of the Week: Amidst falling rates, here is a bond idea offering yields of around 4% and above. Alternatively, for investors who wish to take on slightly higher credit and duration risk, OUESP 4.000% 08Oct2029 Corp (SGD) would be an option offering a higher yield at 4.00%.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds positions in GUOLSP 3.290% 26Oct2026 Corp (SGD), STRTR 3.750% 29Oct2025 Corp (SGD), STRTR 4.100% 04May2026 Corp (SGD), and the analyst who produced this report holds a NIL position in the abovementioned securities.
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