Uni-Asia Group - Phillip Securities 2019-09-11: Positive Property Business In Japan


Uni-Asia Group - Positive Property Business In Japan

  • We were hosted by Uni-Asia Group Limited to visit their hotels and residential properties in Tokyo, Japan.
  • We visited Hotel Vista Tokyo Tsukiji and Hotel Vista Premio Yokohama, and had a chance to look at the ALERO residential properties Staart Moto yoyogi and ALERO Shinjuku 7.

Company Background

  • UNI-ASIA GROUP LIMITED (SGX:CHJ) is an alternative investment company. The company offers structured finance, ship charter arrangement, shipping and maritime asset management, real estate investment and other related services. In Japan, the two real estate business are:
    1. Manage a hotel chain under the “Hotel Vista” or “Hotel Vista Premio” brand;
    2. Develop small residential property projects in Tokyo, named as the ALERO series.

Site Visit Highlights

Hotel Vista Management

  • Uni-Asia Group’s hotel business is aided by the surge in tourism due to the Rugby World Cup in 2019 and the Olympic Games in 2020. The Japanese government placed targets for tourist arrivals at 40M by 2020, as compared to 31M in 2018.
  • Uni-Asia Group plans to ride on the influx of tourism by expanding its hotel presence in Japan. 5 new hotels are to be opened in 2019/2020 under the brands of Hotel Vista and Hotel Vista Premio, which brings to a total number of 3400 rooms with 20 properties under management (2515 rooms with 15 properties currently). Occupancy is expected to increase from 82-83% to 85% with hotel room rates expected to double during the Olympics.
  • Management expects a gradual upward trend in tourist arrivals over the long-run notwithstanding the demand surge from Rugby World Cup and Olympics games. The official target for tourist arrivals in 2030 is 60M. By end 2020, Uni-Asia Group hotels would have coverage of all four main islands in Japan (Hokkaido, Honshu, Shikoku and Kyushu).
  • Uni-Asia Group leases a hotel from the hotel owner and pays lease expense, which is either fixed, variable or a combination of the two. The average leasing period is 15 years, during which it earns income for operating the hotel.

ALERO small residential projects

  • Uni-Asia Group is able to complete 5 to 8 projects on average per year with an average IRR of 20%. The projects have a short investment period of fewer than 2 years, from start of investment such as sourcing of land to completion of a sale. The average investment amount is $US3M to $US5M.
  • The ALERO projects are targeted towards high net worth individuals who wish to purchase properties in Tokyo. It is riding on the wave of rising population in Tokyo as citizens from other cities are moving to Tokyo. Management mentioned that the ALERO projects are able to achieve high IRR as the main criteria for the land sourcing are areas with high rental prices and convenience (less than 10 minutes from Tokyo Metro).
  • ALERO also stated that there is almost 100% occupancy rate as there is little difficulty in finding high-quality tenants. As the targeted tenants are young professionals, default rate is low.
  • The Group purchases suitable land, develops the ALERO project and sells for investment gain. Buyers are usually investors looking for decent rental yield. It may also earn asset management fee by helping owners post-sale with lease management.
  • See attached PDF report for site visit photos of Hotel Vista Tokyo Tsukiji, Hotel Vista Premio Yokohama Minato-Mirai and ALERO residential site.

Edmund Xue Phillip Securities Research | https://www.stocksbnb.com/ 2019-09-11
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998 SAME 99998