UOL Group - DBS Research 2018-05-14: Firing Up For Property Launches

UOL Group - DBS Vickers 2018-05-14: Firing Up For Property Launches UOL GROUP LIMITED SGX: U14

UOL Group - Firing Up For Property Launches

  • UOL Group's 1Q18 net profit declined 8% y-o-y to S$74m due to higher amortisation and depreciation from the consolidation of UIC
  • Amber45 - 69% of released units sold at ASP of S$2,200psf (vs breakeven of S$1,500psf) over the weekend. 
  • Tre Ver (ex-Raintree Gardens) expected to be launched in 3Q18. 
  • RevPAR grew 2% to 8% across the portfolio. 

What’s New 

  • 1Q18 results impacted by higher depreciation from consolidation of UIC. UOL’s 1Q18 earnings fell 8% y-o-y to S$74m, mainly due to higher amortisation and depreciation of S$7.6m from fair value uplifts following the consolidation of UIC and the accelerated depreciation charge of (S$6.6m) from Pan Pacific Orchard which was closed for redevelopment from 2Q18. 
  • Higher revenue from Hotels led by acquisitions, offset by lower property development and property investments. Excluding the impact of the consolidation of UIC, UOL recorded lower revenue from property development (-7% y-o-y) following the completion of Riverbank@Fernvale in Mar17, and property investments (-4% y-o-y). The latter was due to lower revenue from OneKM mall, mitigated by higher revenue from hotel operations (+9%) following contributions from newly acquired Pan Pacific Melbourne in Jul17. 
  • Gross margins higher at 35%. Gross margins were higher at 35% vs 33% in 1Q17, led by higher contributions from property investments which have higher margins. 



  • Good sales momentum on completed projects. In Singapore, UOL continued to record good sales momentum on completed projects such as V on Shenton (85.3% sold in 1Q18 vs 73.4% in 4Q17) and Mon Jervois (74.3% sold in 1Q18 vs 63.7% in 4Q17) while sales activity was low at Principal Garden (99.2% sold as at 1Q18), Clement Canopy (84%), and Pollen & Bleu (75.5%). In China, sales at Park Eleven, Shanghai (36.7% sold as at 1Q18) and The Excellency, Chengdu (99.2%) were relatively flat q-o-q. 
  • Amber45 - 69% sold at ASP of S$2,200psf (vs breakeven of S$1,500psf) over the weekend. We understand that the 139-unit Amber45 which was officially launched over the weekend sold some 69% of released units at an average price of S$2,200 psf. The estimated breakeven for this development is S$1,500psf. Units sold were mostly smaller units while some 20% of the larger units have yet to be released. 
  • Tre Ver (ex-Raintree Gardens) expected to launch in 3Q18.
  • Upcoming launches include
    1. Tre Ver (ex-Raintree Gardens) is expected to launch in 3Q18,
    2. Park Eleven phase 2 in 2H18,
    3. One Bishopsgate Place in 3Q18.
  • Nanak Mansions is targeted to be launched in 2019 while UOL has yet to be officially awarded the Silat Avenue site. 


  • RevPAR growth of 2% to 8% across the portfolio. RevPAR growth was encouraging at 2% to 8% across the portfolio. Looking ahead, the group continues to look for opportunities to expand its hotel portfolio in existing markets and new markets such as Jakarta and Bangkok. 


  • While office spot rents have increased y-o-y, UOL’s commercial properties are still recording negative rental reversions but this is bottoming out. 

Maintain BUY; Target Price S$10.73 

  • We maintain our BUY rating on UOL on its attractive valuation of c.0.8x P/NAV. 
  • As the earliest to landbank at a lower price, UOL stands to benefit from the improved sentiment in the Singapore property segment as evident from its first launch this year, Amber45.
  • The turnaround in the hospitality segment bodes well for UOL’s hotel properties, and now with UIC’s hotel properties. 

Derek TAN DBS Vickers | Rachel TAN DBS Vickers | 2018-05-14
SGX Stock Analyst Report BUY Maintain BUY 10.230 Same 10.230