OUE LIMITED (SGX:LJ3)
OUE Limited - PATMI Back In The Black
- An interim dividend of S$0.01 was declared.
- Healthcare and Consumer divisions performed better.
- Higher fair value estimate of S$1.47.
OUE reported 1H21 net profit of S$30.1m
- OUE (SGX:LJ3)’s 1H21 revenue fell 49.5% y-o-y to S$152.0m, dragged by weaker performances from most of its divisions. Despite a decline in revenue, PATMI turned from a loss of S$207.2m in 1H20 to a profit of S$30.1m in 1H21, largely due to the absence of fair value loss recognised on the sale of U.S. Bank Tower in 1H20.
- An interim dividend of S$0.01 per OUE share was declared for 1H21.
Continued weakness across segments, except for the Healthcare and Consumer
- Revenue from Investment Properties division declined 24.4% y-o-y to S$105.2m in 1H21, due to the divestment of US Bank Tower and the partial divestment OUE Bayfront, OUE Tower and OUE Link.
- Hospitality segment continued to face headwinds from COVID-19, with its revenue falling 41.1% y-o-y to S$25.8m.
- For Development Properties division, 1H21 revenue was S$0.2m as compared to S$98.5m in the same period last year due to the absence of completion of OUE Twin Peaks units sold under deferred payment schemes in 1H21.
- On the other hand, Consumer division’s revenue increased by 22.0% y-o-y to S$6.1m, supported by higher food and beverage sales after the relaxation of dine-in restrictions while Healthcare division’s revenue was stable at S$14.7m.
Higher fair value estimate of S$1.47
- OUE, through its joint venture entity Auric Digital Retail Pte. Ltd. completed the acquisition of ~32.0% stake in Indonesia-listed PT Matahari Department Store Tbk (“Matahari”) to emerge as the single largest and controlling shareholder of Matahari.
- After adjustments and updating our valuation model for lower discount rates (30% discount to RNAV) to factor in the recovery ahead, our fair value estimate for OUE hence increases from S$1.22 to S$1.47.
- See
OUE - ESG Updates
- OUE ranks higher than industry average in terms of social scores due to relatively lower injury and fatality rates. For governance, OUE’s lack of a majority independent board and an independent chairman, and the presence of related party transactions indicate weak governance structure and practices compared to peers.
- Moreover, OUE trails its peers in environmental issue. Despite its effort to adopt green building certification for some of its properties to improve the environmental profile of its buildings, OUE does not demonstrate a strong green investment commitment across its portfolio, indicated by the lack of disclosures on sustainability-linked targets.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2021-08-06
SGX Stock
Analyst Report
1.47
UP
1.220
