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:
- gains from the disposal of Crowne Plaza Changi Airport to OUE H-Trust (SGD57.8m);
- negative goodwill from its acquisition of Gemdale shares (SGD143.4m); and
- fair-value gains on investment properties (SGD6.9m).
- These were offset by:
- impairment charges for OUE Twin Peaks (SGD23.2m);
- goodwill impairment for its additional interest in OUBC (SGD12.4m); and
- 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
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http://www.maybank-ke.com.sg/
2016-02-22
Maybank Kim Eng
SGX Stock
Analyst Report
2.04
Same
2.04
