UOL GROUP LIMITED (SGX:U14)
UOL Group - Stable Quarter
UOL Group's 3Q20 business update
- In its 3Q20 business update, UOL Group (SGX:U14) indicated that its residential projects continue to record healthy sales. Its office portfolio occupancy remains resilient while its retail portfolio committed occupancy remains largely stable even as shopper traffic continues to be lower y-o-y.
- Meanwhile, alternative revenue streams provide some support for its hospitality business. Balance sheet remains healthy with gearing at 0.32x, unchanged q-o-q, and unutilised credit facilities of S$2.8bn at end-3Q.
Residential sales continue to gain traction
- In 3Q20, UOL Group continued to see higher take-up at its existing projects. It sold another 119 units across its projects in Singapore, the UK and China, with Singapore accounting for the largest 94% of total 3Q sales. This is higher than the sales rate in 2Q20.
- Avenue South Residence is 53.2% sold to date while The Tre Ver is 98.6% taken up. UOL Group targets to launch Clavon at Clementi Ave 1 in Dec 2020 and plans to roll out its recently won 448- unit residential plot at Canberra Drive in 1H21.
Office and retail portfolio occupancy remain largely stable
- While occupancy at its retail malls dipped slightly q-o-q to 93.5%, daily shopper traffic has recovered to 54% of pre-Covid levels. UOL Group continues to provide targeted support for selected tenants who are still not able to re-open or whose revenue has been significantly impacted by the COVID-19 pandemic. It has a remaining 7% of retail NLA to be renewed in 4Q20.
- Office occupancies in Singapore, UK and Australia remained high at 94.9-100%, though new leasing demand is expected to remain soft due to the uncertain economic outlook. It has a balance of 5% of office area to be renewed in 4Q20.
- Within the hospitality business, revenue per available room (RevPar) for its portfolio of hotels declined 52-59% y-o-y for 9M20, with hotels in Singapore and other parts of Asia under the most pressure. In Singapore, most of its hospitality properties have opened for staycation business while some of its Australia and Singapore hotels are supported by alternative businesses such as extension of government quarantine contracts.
Reiterate ADD rating
- We leave our UOL Group's FY20-22F earnings estimates unchanged but raise our RNAV to S$12.66 to factor in a higher UOB Target Price. Accordingly, our target price is lifted to S$7.60, based on an unchanged 40% discount to RNAV.
- See UOL Group Share Price; UOL Group Target Price; UOL Group Analyst Reports; UOL Group Dividend History; UOL Group Announcements; UOL Group Latest News.
- We continue to like UOL Group for its diversified business model with a high proportion of recurring income.
- Re-rating catalyst could come from a faster-than-projected recovery of its hotel operations.
- Downside risk: slower-than-expected pace of residential sales.
LOCK Mun Yee
CGS-CIMB Research
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https://www.cgs-cimb.com
2020-11-11
SGX Stock
Analyst Report
7.60
UP
7.290
