Guoco a recovery play
GUOCO Group is engaged in commercial banking in Hong Kong through its 72 per cent stake in Dao Heng Bank and is involved in financial and property operations in Singapore and Malaysia.
Core Pacific-Yamaichi has placed a buy recommendation on the stock, citing its undemanding valuation.
The brokerage said that despite the 30 per cent price rally since it recommended the stock in its April investment strategy report, it believed there still would be a further 46 per cent upside.
A fair-value estimate for Guoco was a conservative $26, the brokerage said.
'Guoco is an attractive play on Dao Heng Bank, given that Guoco is trading at a 55 per cent discount to the market value of its 72 per cent stake in the bank,' Core Pacific said.
In February, Guoco sold its 30 per cent stake in ABN Amro Asia for US$220 million, generating a capital gain of HK$1.29 billion, or $3 a share.
Core Pacific said a regional economic turnaround would benefit Guoco's financial and property operations in Singapore and Malaysia.