UOL Group - DBS Research 2020-08-06: Riding On Singapore’s Reopening

UOL GROUP LIMITED (SGX:U14) | SGinvestors.io UOL GROUP LIMITED (SGX:U14)

UOL Group - Riding On Singapore’s Reopening

  • Singapore-centric and rides on the progressive reopening of Singapore’s economy.
  • Extensive backing from the local government provides good downside support.
  • Offers good value at 0.6x P/NAV, close to -1SD, as it progressively recovers from COVID-19.



Maintain BUY; lower Target Price to S$8.40.

  • We maintain our BUY rating for UOL Group (SGX:U14) but lower our target price (TP) to S$8.40 from S$9.50 previously, pegged to a 30% discount to our revalued net asset value (RNAV). Our Target Price implies 0.7x P/NAV, close to its 5-year -0.5 standard deviation (SD). The stock offers good value at 0.6x FY20F P/NAV (at close to -1 SD) as it progressively recovers post the reopening of Singapore’s economy.


Where we differ: Singapore-centric riding on the progressive reopening of Singapore’s economy post Circuit Breaker.

  • Compared to its peers, the bulk of UOL’s earnings are contributions from its Singapore portfolio. We believe the extensive backing from the Singapore government provides good downside support and the progressive reopening of the Singapore economy bodes well for UOL, moving forward. In addition, the potential redevelopment of Marina Square would position UOL on its next phase of growth post COVID-19.


Potential Catalysts: Unlocking value of its commercial and hospitality assets, and quicker recovery post COVID-19.

  • We revised our FY20F/FY21F estimates substantially based on profit warning and decline in valuations: Following the profit warning released by UOL, we lower our FY20F / FY21F estimates substantially by 36-92%, recognising earnings impact from COVID-19 and losses from the hospitality sector. We have also included a c.S$170m decline in property valuations.


Valuation:






Rachel TAN DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2020-08-06
SGX Stock Analyst Report BUY MAINTAIN BUY 8.40 DOWN 9.500



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