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OUE Limited - Maybank Kim Eng 2016-02-22: Plenty of One-Offs

OUE Limited - Maybank Kim Eng 2016-02-22: Plenty of One-Offs OUE LIMITED LJ3.SI 

OUE Ltd (OUE SP) Plenty of One-Offs 


In Line; Maintain HOLD & SGD2.04 TP 

  • Maintain HOLD after 4Q15 results announcement with underlying performance broadly in line. 
  • Although cheap relative to history, we believe the stock is unlikely to perform, given unrelenting headwinds for its residential project and large exposure to Singapore's prime office oversupply. 
  • We keep our estimates and RNAV-based TP of SGD2.04 (46% implied discount) pending a full model update. 
  • Prefer CityDev in the sector. 

Mixed Results, with Many One-Offs 

  • FY15 reported income was SGD156.4m (FY14: SGD1,094m, -85.7% YoY) vs our SGD56.7m due to one-offs. The YoY decline reflected a SGD1b gain from the deconsolidation of OUE H-Trust last year. 
  • This year, there were also many one-offs: 
    1. gains from the disposal of Crowne Plaza Changi Airport to OUE H-Trust (SGD57.8m); 
    2. negative goodwill from its acquisition of Gemdale shares (SGD143.4m); and 
    3. fair-value gains on investment properties (SGD6.9m). 
  • These were offset by: 
    1. impairment charges for OUE Twin Peaks (SGD23.2m); 
    2. goodwill impairment for its additional interest in OUBC (SGD12.4m); and 
    3. fair-value losses from its stake in a mutual fund (SGD8.4m). 
  • Underlying performance was in line. 

Another Impairment for OUE Twin Peaks 

  • OUE booked a SGD23.2m impairment charge for 99-year-leasehold OUE Twin Peaks (FY14: SGD105m). 
  • Sales remained weak with only 16% or 72 of its 462 units sold. The project has a QC deadline of early 2017 and OUE will need to start paying penalties on unsold units then. 

Property Valuation Changes 

  • The value of OUE Downtown and US Bank Tower improved by 5.4% to SGD1.477m and 8.8% to USD530m respectively, thanks to ongoing AEI. 
  • OUE attributed a 20% decline in the value of its available-for-sale financial assets to fair-value losses at Marina Centre Holdings.



Derrick Heng CFA Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2016-02-22
Maybank Kim Eng SGX Stock Analyst Report HOLD Maintain HOLD 2.04 Same 2.04


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