Real Estate Day Wrap-Up - CGS-CIMB Research 2019-04-17: Tuan Sing, United Engineers, UOL


CGS-CIMB Real Estate Day - Key Highlights From Participating Companies


  • Tuan Sing Holdings Limited (SGX:T24) is a diversified regional investment holding company with interests mainly in property development, property investment and hotel ownership. Its projects are located in Singapore and around the region.
  • In addition, Tuan Sing has an 80.2% stake in listed SP CORPORATION LIMITED (SGX:AWE) and a 97.9% stake in Hypak Sdn Bhd. It also holds a 44.5% share of Gul Technologies Singapore Pte Ltd and a 49% interest in Pan-West (Private) Ltd.
  • Common questions raised by investors were generally related to:
    1. demand prospects and returns on its development projects which include Batam Opus Bay in Indonesia;
    2. proportion of available space that had secured leases for its investments projects – 18 Robinson (over 60% of space leased) and 896 Dunearn Road (over 50% leased; formerly known as Sime Darby Centre) and
    3. plans for its non-core investments.
  • Management sounded upbeat on the prospects of its upcoming development projects which include Batam Optus Bay, a 125-hectare integrated mixed-development township located next to the waterfront ferry terminal and could potentially benefit from the authorities’ push for infrastructure development as well as increasing tourism in Batam. Optus Bay could potentially yield better margins relative to its Singapore projects and will be constructed progressively in phases with phase 1 targeted to launch in 2019.
  • Over to Tuan Sing's residential development projects – comprising Kandis Residence, Mont Botanik Residence and 333 Thomson Road – in Singapore, management believes they are in a niche segment with smaller-sized apartment projects, thus they could expect to have a good sales run for these projects amid current market conditions. The company expects to launch 333 Thomson Road in 2019.
  • On plans for its non-core businesses, management shared that it hopes to “rationalise” its investments, especially in 44.5%-owned Gul Technologies Singapore, a printed circuit board manufacturer and trader. Gul Technologies reported profit after tax of US$36.1m on revenue of US$337.6m in FY18.
  • Other positive takeaways also include AEI plans to boost rental yields for Hyatt Centre in Perth with additional rental income from new retail tenants expected to contribute in 2020.


  • United Engineers Limited (SGX:U04) was founded in 1912. Building on its early engineering roots, the Group has evolved with key business activities in property rental and hospitality, property development, engineering and distribution as well as manufacturing. In addition to its landmark UE Bizhub CITY, other properties within United Engineers' portfolio also include UE Bizhub EAST, UE Shopping Mall and Rochester Mall, amongst others.
  • Common questions raised by investors were generally related to:
    1. impact from the latest Master Plan 2019 to its investment property portfolio;
    2. updates on its residential development project in Singapore and
    3. plans for its non-core businesses.
  • For UE Bizhub City and UE Square Mall, management is exploring various AEI options. The key considerations are cost of the AEI and possible short-term revenue impact. UE BizHub Tower which is located at 79 Anson Rd is a premium, well-maintained 23-storey freehold commercial development located at the junction of Anson Road and Palmer Street with easy accessibility via a two-minute walk to the area’s well-linked underground pedestrian network and the Tanjong Pagar MRT Station. UE Bizhub Tower qualifies for an increase in gross plot ratio under the government’s plan to rejuvenate the CBD. Management will explore its options for UE Bizhub City.
  • For the Dairy Farm site, United Engineers intends to build an integrated development with commercial and residential units. This is a 99-year leasehold site and an estimated 450-460 residential units may be built. The project is scheduled to be launched in 4Q19.
  • United Engineers’ non-core businesses are mainly in Manufacturing as well as Engineering and Distribution. As United Engineers’ aim is to be a real estate company, management will continue to work on selling these businesses.
  • We maintain our RNAV of S$3.46 and Target Price of S$2.94, pegged at a 15% discount to RNAV. United Engineers is trading at a 14% discount to RNAV. Hence, we retain our ADD rating.
  • Potential re-rating catalysts could emerge from realising low-hanging fruits from any asset enhancements at its properties, which we have not factored into our current RNAV.
  • Downside risks could come from execution delays.


  • UOL Group (SGX:U14) is one of Singapore’s leading property companies with total assets of S$20bn. It has a diversified portfolio of residential development and investment properties, hotels and serviced suites in Asia, Oceania and North America. Through its hotel subsidiary, Pan Pacific Hotels Group Ltd, UOL Group owns two hotel brands – “Pan Pacific” and PARKROYAL. Its listed subsidiary, UNITED INDUSTRIAL CORP LTD (SGX:U06), owns an extensive portfolio of prime commercial assets and hotels in Singapore.
  • Common questions raised by investors were generally related to:
    1. recent announcement by its subsidiary United Industrial Corp on the acquisition of the 24.27% stake in Marina Centre Holdings (MCH) and 25% stake in Marina Mandarin Hotel (MMH);
    2. any positive impact on its investment property portfolio from the recent Master Plan 2019 and
    3. outlook on the Singapore private residential market.
  • Investors were generally positive on the MCH and MMH transactions by United Industrial Corp deal. Post acquisition, UOL Group / United Industrial Corp will own 100% of MCH and also 100% of Marina Mandarin Hotel. Investors were also curious about the potential for asset enhancements at this mixed development. According to media reports, there is also opportunity to rebrand and rename the hotel.
  • In terms of tapping into asset enhancement opportunities from the incentive schemes introduced in the latest Master Plan (see report: Property Development & Inventory - Sustainable Transformation), properties in the CBD core area could include Singapore Land Tower and Clifford Centre.
  • The Singapore private residential market remains fairly stable and sell-through rate for ongoing projects such as The Tre Ver are decent. Planned new launches such as Avenue South Residence and Meyerhouse could occur in 2Q19.
  • We maintain our ADD rating and Target Price of S$8.45. UOL Group's balance sheet remains healthy with a net debt to equity ratio of 0.28x at end-FY18.
  • Upside catalyst could come from accretive new investment opportunities.
  • Downside risks include a slower-than-expected pace of residential launches and office market recovery.

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LOCK Mun Yee CGS-CIMB Research | https://research.itradecimb.com/ 2019-04-17
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000