Tuesday 4 March 2014

UOL Group

OCBC on 3 Mar 2014

UOL reported 4Q13 PATMI of S$189.2m, down 59.2% mostly due to reduced fair value gains on investment properties and a smaller contribution from the property development segment. Excluding non-core items, FY13 core PATMI cumulates to S$344.2m, which makes up 100.0% of our full year forecast and is judged to be in line with expectations and slightly below consensus. In terms of the topline, FY13 revenue came in at S$1,058.6m, down 7.6% as the contribution from property development fell given that Terrene at Bukit Timah and Waterbank at Dakota achieved TOP in 1Q13 and 2Q13, respectively. The group proposed a total dividend of 20 S-cents, which includes a special dividend of 5 S-cents on top of the first and final dividend of 15 S-cents per share. Maintain BUY with a reduced fair value estimate of S$6.95 (20% RNAV disc.), versus S$7.16 previously, mostly due to lower valuations of listed holdings and softer ASPs in our model.

4Q13 figures generally within expectations
UOL reported 4Q13 PATMI of S$189.2m, down 59.2% mostly due to reduced fair value gains on investment properties and a smaller contribution from the property development segment. Excluding non-core items, FY13 core PATMI cumulates to S$344.2m, which makes up 100.0% of our full year forecast and is judged to be in line with expectations and slightly below consensus. In terms of the topline, FY13 revenue came in at S$1,058.6m, down 7.6% as the contribution from property development fell given that Terrene at Bukit Timah and Waterbank at Dakota achieved TOP in 1Q13 and 2Q13, respectively. The group proposed a total dividend of 20 S-cents, which includes a special dividend of 5 S-cents on top of the first and final dividend of 15 S-cents per share.

Difficult conditions in domestic residential space
UOL sold 578 and 88 residential units in Singapore and China, respectively, in FY13 with a total sales value of more than S$552m. Earlier this year, the group launched Riverbank@Fernvale and its sales performance was moderate; the 555-unit residential project saw more than 200 units sold at ASPs just north of S$1.0k psf. Previously launched 435-unit Thomson Three is ~78% sold with average selling prices of S$1.3k psf and Seventy St. Patrick’s (186 units) is to be launched in 2Q14. Management indicates that conditions in the domestic residential space continue to be difficult and they would replenish landbank on a very selective basis.

Focus on growing recurring income
Given residential uncertainties, management will continue to deploy capital into growing its recurring income businesses. Hotel RevPar generally grew across key markets in 2013 (Singapore and Southeast Asia up 22% and 12% to S$193 and S$101, respectively) while China saw a 9% dip to S$38. The pre-commitment level at One KM, slated for opening in Sep-14, is now ~ 80%. Maintain BUY with a reduced fair value estimate of S$6.95 (20% RNAV disc.), versus S$7.16 previously, mostly due to lower valuations of listed holdings and softer ASPs in our model.

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