UOL Group Ltd (UOL SP) - Maybank Kim Eng 2017-08-25: Onwards And Upwards

UOL Group Ltd (UOL SP) - Maybank Kim Eng 2017-08-25: Onwards And Upwards UOL GROUP LIMITED U14.SI

UOL Group Ltd (UOL SP) - Onwards And Upwards

Raising TP for higher UOB TP; Maintain BUY, Top Pick 

Most liquid proxy to higher property prices in SG 

  • UOL continues to be the most liquid proxy to an impending rebound in Singapore property prices with the country accounting for almost 80% of its valuation. The stock trades at an attractive 26% RNAV discount and 0.8x P/BV. 
  • For investors with lower liquidity thresholds, recently initiated GuocoLand (GUOL SP, BUY, Target Price SGD2.75, see report: GuocoLand - Riding The Singapore Upcycle ) also offers compelling relative value with improving fundamentals.

Astute and cautious approach to land banking 

  • We believe UOL has been ahead of the curve in identifying the potential of the Bidadari area. 
  • Riding on the success of Botanique at Bartley, it acquired the Raintree Gardens site ahead of the curve. Since then, land prices have moved up significantly and we believe it is in a very comfortable position for the eventual selling price due to its relative cost advantage.
  • Our current ASP assumption of SGD1,600 psf for this project looks very conservative when compared to an estimated breakeven price of SGD1,600 psf for the recently awarded site at Woodleigh Lane. 
  • Management reiterates that it will not participate in a land tender if it cannot add value and prices are not attractive.

Value-unlocking potential a medium-term theme 

  • While we opined that the recent share swap deal between related parties of Dr Wee Cho Yaw remains a paper exercise for now, an eventual control of UIC would allow the company to unlock the potential in its assets. We see this as a less-risky and cheaper way to create shareholders’ value in times of elevated land prices.

Swing Factors


  • Monetisation of property assets.
  • Rebound in home sales.
  • Unwinding or restructuring of cross-holdings in related parties like UOB, UIC and Haw Par.


  • Overpaying for land.
  • Poor execution of development projects.
  • Sharp increase in interest rates, which could dampen demand for properties and drive down asset prices.

Derrick Heng CFA Maybank Kim Eng | 2017-08-25
Maybank Kim Eng SGX Stock Analyst Report BUY Maintain BUY 9.43 Up 9.050