GuocoLand 4.4% 5 year Senior Unsecured SGD

Shawn Sng  |   01 Aug 2023  |    61 views

GuocoLand Limited recently announced the issuance of its 5-year senior unsecured bonds with a final price guidance of 4.4%. These bonds carry a tenor of 5 years which will mature on 27th July 2028 with semi-annual coupon payments which are scheduled on 27 January and 27 July each year. The first coupon payment will be paid on 27 January 2024 and these notes are unrated.


The notes are being issued under GuocoLand’s S$3 billion Multicurrency Medium Term Note Programme, and the proceeds will be used to finance general working capital and corporate requirements of the group.


Company Overview

GuocoLand Limited (“GuocoLand”) is a public company listed on the Singapore Exchange (SGX) under the ticker F17. The company is headquartered in Singapore and its principal business activities are property development, property investment, property management, and hotel operations. GuocoLand also has operations in different geographical markets, including Singapore, China, and Malaysia.


1H FY2023 Financials

GuocoLand delivered growth in its revenue with it achieving an increase of 46% YoY (from $452.7m in 1H FY22 to $661.6m in 1HFY23). This increase was mainly driven by the strong performance of both the Group’s Property Development (higher progressive recognition of sales from its residential projects in Singapore) and Property Investment businesses (higher rental revenues from Guoco Tower and contribution from Shanghai’s Guoco Changfeng City South Tower, which commenced operations during the period).


In terms of its credit position in 1H FY23, GuocoLand reflected its sturdy ability in generating cash flow despite several headwinds such as supply chain issues, labour shortages, and rising costs. It managed to maintain a positive cash flow of $975.1m. In 1H FY23, its cash and cash equivalents stood at $993.5m which will be unable to cover its short-term obligations of $2.85bn. However, with the sales of its residential projects going strong such as 521 of 605 units of it Lentor Modern already being sold, and it’s highly anticipated Lentor Hills Residence consisting of 598 units is expected to launch in the first half of 2023. This will provide the boost in cash flow that the company will require.


Additionally, revenues (e.g. positive lease reversion) and occupancy rates from its premium Grade A offices (Guoco Tower – close to 100%, 20 Collyer Quay – 95%) have been growing consistently over the years despite the hybrid working environment being in place. This will further bolster the company’s cash flow-generating ability. In 1H FY 23, the company’s gearing was reduced from 1 time to 0.9 times as total loans and borrowings were reduced by 8% from the previous quarter due to repayment being made during the period. Thus, with all this information in play, it is believed that GuocoLand should be able to meet its obligations.


As the initial offering has closed for subscription, investors who are interested in these notes will have to head onto the bond’s secondary market on our POEMS platform to get hold of them. These notes can be transacted in a minimum lot size of SGD$250K.


Bond Overview


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