OUE Ltd - OCBC Investment 2016-08-08: Encouraging sales at Twin Peaks

OUE Ltd - OCBC Investment 2016-08-08: Encouraging sales at Twin Peaks OUE LIMITED LJ3.SI

OUE Ltd - Encouraging sales at Twin Peaks

  • 2Q16 results broadly within expectations. 
  • Increased sales efforts at Twin Peaks
  • More than 100 units sold in 2Q16. 

Encouraged by sales at OUE Twin Peaks 

  • 2Q16 PATMI increased YoY to S$25.7m versus a S$16.3m loss in the same period last year. 
  • The improvement was mainly due to reversal of impairment losses on OUE Twin Peaks and the absence of mark-to- market losses on the group’s investment in a mutual fund in 2Q15, but partially offset by higher borrowing costs over the quarter. 
  • In terms of the topline, we saw 2Q16 revenues improve 40.4% YoY to S$134.3m due to stronger contributions from the property development division, and also higher revenues from the property investment division (up 58.4% YoY to S$67.6m) after One Raffles Place’s contributions were consolidated following the acquisition of an additional interest in OUE Centre Limited in Oct 2015. 
  • On the whole, we judge this quarter’s numbers to be broadly within expectations and are encouraged by management’s ability to move units at Twin Peaks with its marketing efforts and deferred payment option for buyers.

Enhancement works at OUE Downtown on track 

  • Management updated that it has opened California’s higher open-air observation deck, OUE Skyspace, at the U.S. Bank Tower in June 2016, which now has a committed occupancy rate of 74.6% - up marginally from 74.2% at end Mar 2016. 
  • The occupancy rate at OUE Downtown, however, slipped to 85.3% (versus 88.0% at end Mar 2016) as the group continues its asset enhancement works at the development which is on track to complete at end 2016. 
  • Finally, at OUE Twin Peaks, management reported that more than 100 units have been sold in 2Q16 as a result of increased marketing efforts, which will continue into the remainder of the year. 
  • An interim tax- exempt dividend of 1.0 S-cents and special tax-exempt dividend of 2.0 S-cents were proposed. 
  • Maintain BUY with an unchanged fair value estimate of S$2.17.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2016-08-08
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 2.170 Same 2.170