OUE Limited - OCBC Investment 2020-11-19: Weak 3Q20, But PATMI Back In The Black

OUE LIMITED (SGX:LJ3)

OUE Limited - Weak 3Q20, But PATMI Back In The Black

OUE (SGX:LJ3)’s 3Q20 results came in broadly within our expectations. 3Q20 revenue fell 52.5% y-o-y to S$134.2m, dragged by weaker performances from all divisions. PATMI recovered from a loss of S$207.2m in 1H20 to a profit of S$2.0m in 3Q20 (-98.4% y-o-y).
The decline in PATMI in 3Q20 was largely attributable to fair value losses on investments, exchange losses due to weakening of the USD and absence of one-off non-cash gains recognized in 3Q19.

On a segmental basis, OUE's Investment Properties declined 9% y-o-y to S$65.8mm in 3Q20 due to rental reliefs extended to eligible retail tenants. ~S$19.9m of rental rebates have been provided to tenants year-to-date. Hospitality segment’s revenue declined 62% y-o-y to S$23.8m, on the back of travel restrictions and absence of contribution from the Oakwood Premier OUE Singapore which was sold in 4Q19.
Separately, 3Q20 revenue of OUE's Development Properties was down 75% y-o-y to S$33.4m due to lower sales completion from OUE Twin Peaks units and absence of S$95.0m revenue from the sale of the Nassim Road development project in Aug 2019.

OUE completed the sale of U.S. Bank Tower for US$230m in 3Q. Part of the proceeds was used to pare down US$183.3m of debt as mentioned by management previously as one of the rationale for the disposal of U.S. Bank Tower. As such, net gearing improved from 57.8% to 49.7% as at 30 Sep 2020. No further refinancing requirement for OUE until 2022 (S$200m in 2022 and S$405m in 2023).
After adjustments, our fair value estimate remains at S$1.22.
See OUE Share Price; OUE Target Price; OUE Analyst Reports; OUE Dividend History; OUE Announcements; OUE Latest News.

Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2020-11-19

SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.220 SAME 1.220