GuocoLand announced 3Q09 results, reported profit of S$4.9million. Core profit, after mark-to-market gain on derivative financial instruments, unrealized foreign exchange loss and adjustment for over provisioning, was in line with our estimates. The View @ Meyer, one of the group's residential development projects in Singapore, obtained Temporary Occupation Permit (TOP) during the quarter.

Re-launch of The Quartz a success. The 182 units in The Quartz was re-launched during the quarter and is almost sold at an average price of about S$600 psf. With the pick up in property sales in Singapore in general, we think the group is likely to launch Sophia Residences at Dhoby Ghaut in calendar year 2009. That said, large development projects such as Leedon Heights redevelopment would be further deferred in our view.

Gearing remains at an elevated level. Net debt to equity for the group stood at 124% as of 31 Mar 2009 with S$980mil debt to be refinanced in the next 12 months. With property sales still at a slow phase in both Singapore and China and the lack of resolution of the legal title for the DZM project, we expect the group's gearing to remain at an elevated level for the next 2 -3 year.

Legal issues on DZM project yet to be resolved. The group is currently still awaiting the decision on the group's 90% interest in the DZM project from Beijing Intermediate Court and Hainan High Court. While we continue to hold our view that the resolution on the DZM legal issues in favor of GuocoLand would act as a positive share price catalyst for the stock, we see potential risks of these legal proceeding dragging on for another year which would stretch the company's balance sheet further in the near term.