UOL Group - DBS Research 2017-05-15: Deep Value Play

UOL Group - DBS Vickers 2017-05-15: Deep Value Play UOL GROUP LIMITED U14.SI

UOL Group - Deep Value Play

  • 1Q17 net profit was in line with estimates.
  • Commercial and hotel portfolio offers stability.
  • More launches of recently acquired sites in 2018.
  • Raised TP to S$8.73 on narrower 20% discount to RNAV.


Valuations still attractive. 

  • We maintain our BUY rating on UOL Group (UOL) as it is trading at an attractive valuation of c.0.7x P/NAV, which is at the lower end of its historical range. 
  • The successful launches of recently purchased land sites in the enbloc market will be re-rating catalysts for the stock. We have lifted our TP to S$8.73 based on a narrower 20% discount to RNAV of S$10.90.


1Q17 results stable. 

  • UOL reported a 4% rise in earnings to S$80.3m, in line with expectations. 
  • Management believes the Singapore property market has stabilized, and UOL has been more aggressive in landbanking than the other large cap developers. 
  • Key positives from the results were: 
    1. revenue growth from all divisions, and 
    2. stable portfolio occupancy rates. 
  • The group has recently acquired more landbank, offering longer term income visibility.


Most aggressive in landbanking in Singapore; bulk of new launches in 2018. 

  • There was good interest The Clement Canopy (1Q17; 505 units), which was officially launched in 1Q17. Management expects to launch Raintree Garden, Amber Road and Bishopsgate in 2018.


Valuation

  • Maintain BUY on attractive valuations. We raised our TP to S$8.73, pegged to a 20% discount to our RNAV of S$10.90, taking into account new properties acquired.


Key Risks to Our View

  • Economic slowdown. The downside risk to our projections is if residential sales are slower than our projections or if commercial properties and hotels operations are impacted by slower-than-projected growth in rental/room rates.




Rachel TAN DBS Vickers | Derek TAN DBS Vickers | http://www.dbsvickers.com/ 2017-05-15
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 8.73 Up 7.640



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