UOL GROUP LIMITED (SGX:U14)
UOL Group - Uptick In Home Price Growth Momentum
- Singapore private home price growth accelerated to 3.2% (flash estimates) q-o-q in 2Q22.
- Household debt situation still supportive of demand.
- Committed to ESG initiatives such as greening its portfolio.
Singapore private home price growth gathered momentum in 2Q22
- UOL Group (SGX:U14) derived 48.4% of its revenue and 24.5% of its adjusted EBITDA from its property development segment in Singapore in FY21.
- According to flash estimates from Urban Redevelopment Authority (URA), Singapore’s private residential property price index rose 3.2% q-o-q in 2Q22. This was an increase in momentum as compared to the 0.7% q-o-q growth in 1Q22, which was likely impacted by the property cooling measures announced in mid-Dec 2021.
- Prices of landed properties rose 2.9% q-o-q (1Q22: +4.2%), while non-landed properties saw a q-o-q rebound of 3.3% in 2Q22 after suffering a decline of 0.3% in 1Q22. For the non-landed segment, the Rest of Central Region (RCR) saw the strongest increase of 6.0% q-o-q in 2Q22, followed by the Outside Central Region (OCR) (+1.7%) and Core Central Region (CCR) (+1.6%).
Household balance sheets still seen as healthy in Singapore
- The Singapore government highlighted in a parliamentary response that the household debt situation remains healthy, although prudence is warranted as interest rates are expected to increase in the coming years. For example, the median Total Debt Servicing Ratio (TDSR) stood at 43% in 2021, which is still within the threshold limit of 55%, while the proportion of delinquent mortgages was less than 1%.
- Furthermore, household net wealth grew even through the pandemic, and most households should still be able to service their mortgages even as domestic interest rates are likely to increase ahead.
- Assuming if the situation does not deteriorate sharply from there, we believe UOL’s upcoming project launches would still be able to see decent demand.
Increasing focus on ESG
- We expect UOL to step up its efforts on ESG initiatives. Its FY21 annual report highlighted that it is developing a 3-year sustainability roadmap with an external consultant to step up on its decarbonisation efforts. It is also targeting the adoption of the Task Force on Climate- Related Financial Disclosures (TCFD) in the next two years, and is committed to greening its buildings from S$8.39 to S$8.56.
- See
OCBC Research Team
OCBC Investment Research
|
https://www.iocbc.com/
2022-07-18
SGX Stock
Analyst Report
8.56
UP
8.390
