Uni-Asia Group Limited - Tayrona Financial Research 2018-08-23: On Track To A Record Year

Uni-Asia Group Limited - Tayrona Financial Research 2018-08-23: On Track To A Record Year UNI-ASIA GROUP LIMITED SGX:CHJ

Uni-Asia Group Limited - On Track To A Record Year

1H18 profitability exceeded expectations.

  • Uni-Asia Group Limited’s PATMI grew by 7% from US$4.8m in 1H17 to US$5.1m in 1H18, driven by a 14% increase in total income.
  • Growth in 1Q18 was aided by the reversal of impairment expenses upon the disposal of certain assets while the group recognized about US$3.1m of fair value gains from the completion of its 13.4% owned property development project in HK.
  • The strong performance in 2018, driven by diverse sources, shows that Uni-Asia Group’s momentum from its diversified strategy is still intact following its turnaround in 2017.

Third HK project development project to contribute in 2H18.

  • We expect Uni-Asia Group to start recognizing fair value gains from its third HK property development project, an 11.9% owned commercial office building to be completed by 2019, in 2H18. We understand that this project is already fully sold.
  • Decent gains over the investment sum of US$6.4m can be expected, given that Uni-Asia Group recognized US$6.78m of fair value gains from its commercial building portfolio in 2017 and US$3.1m of gains from its US$10.4m investment in the second project.

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Pipeline of small residential projects to be completed in 2H18.

  • Uni-Asia Group’s outlook for 2H18 is further supported by four small residential projects to completed in August and September 2018. According to the group, the average small residential project has an IRR of more than 40% against an investment sum of US$3m to US$5m per project.

Rising charter rates and lower fair value loss from the shipping business in 2H18.

  • Uni-Asia Shipping’s average charter hire rate rose from US$9,453 per day in 1H17 to US$9,875 per day in 1H18.
  • The shipping business’s performance in 1H18 was partially affected by US$1.3m of fair value loss from its product tanker investment. This product tanker has since been sold in July and we do not expect further losses from this vessel.
  • In fact, there may be further gains in 2H18, depending on whether the group manages to dispose some of its containerships.

Hotel management business wins top award, to grow room count by 18% in 2019.

  • Uni-Asia Group’s hotel management business Hotel Vista has been voted first for the business and family travel subcategories in the less than JPY15,000/night category in a ranking organised by “Jalan.net” one of the largest online hotel booking sites in Japan.
  • In 2H18, Uni-Asia Group plans to add Hotel Vista Hiroshima (228 rooms) and Hotel Vista Premio Kyoto Nagomitei (84 rooms) to its portfolio and bring its total room count to 2,669. Room count is expected to increase by 18% to 3,152 in 2019 with the addition of two more hotels in Osaka and Fukuoka City.
  • In this update, we maintain our Overweight rating on Uni-Asia with an upgraded high return and low risk view. However, we raise our valuation to S$1.99 per share (0.5x FY18 NAV) given the positive performance of the group.

Liu Jinshu NRA Capital Research | Tayrona Financial 2018-08-23
SGX Stock Analyst Report OVERWEIGHT Maintain OVERWEIGHT 1.99 Up 1.850