GuocoLand soars to six-year high

KUALA LUMPUR: The hardly traded GuocoLand (M) Bhd has attracted buying interest of late following its recent acquisition of a property company to expand its land bank and a slew of development plans.

Its share price jumped 33 sen or 22% to RM1.85, the highest close since April 2008, up from RM1.52 last Friday. Its trading volume has soared in the past four trading days. Some 20.61 million shares changed hands yesterday.

Dealers said the sudden surge in interest could be that the property stock was catching up now as it had lagged behind while most mid- and small-cap property counters had rallied.

GuocoLand, the property arm of Hong Leong Group, on July 23 announced its plan to acquire a 9.39% stake in Continental Estates Sdn Bhd for RM4.75 million in cash, as well as 11.88% of cumulative redeemable preference shares in Continental Estates for RM33.14 million from Symphony Life Bhd.

Continental Estates is a property development company and is involved in the operation of an oil palm estate. It is currently 50%-owned by GuocoLand and will be its subsidiary after the completion of the acquisition.

The other joint-venture partners of Continental Estates are IOI Properties Group Bhd and Errigal Investment Holdings Ltd.

GuocoLand said the acquisition of an additional stake in Continental Estates would enable the group to enhance its land bank for future development.

At present, its land bank totals 4,047ha, comprising 2,023ha in Sepang in Selangor, 1,619ha in Jasin, Melaka and pockets of land in the Klang Valley.

GuocoLand also announced its plan to develop a township in Rawang, Selangor, a mixed development in Sepang and a corporate office venture in Petaling Jaya.

On July 18, 2014, GuocoLand managing director Tan Lee Koon reportedly said the company will open the second phase of the residential development in Sepang in the middle of August, while commercial products are also in the pipeline in the area.

The RM2.5 billion gross development value Damansara City is scheduled to be fully completed by mid-2016, ahead of the mass rapid transit Sungai Buloh-Semantan line, which is set to be operational before end-2016.

Tan said the development, which encompasses a shopping mall, will provide a substantial recurring income base for the company.

This article first appeared in The Edge Financial Daily, on July 31, 2014.