• Boost from divestment gain
• 1Q14 numbers within expectations
• Wait-and-see for Seventy St. Patrick’s

1Q14 figures broadly in line

UOL’s 1Q14 PATMI came in at S$120.8m, up 69% YoY mostly due to a one-time divestment of its Malaysian Jalan Conley site which contributed S$44.3m. Adjusting for this, we estimate core PATMI at S$76.5m; this constitutes 23% of our full year estimates which we judge to be mostly in line with expectations. In terms of the topline, 1Q overall revenues increased 65% YoY to S$408.8m, again similarly boosted by the sale of the Jalan Conley site in Malaysia. In addition, revenues from the hotel segment grew 8% YoY to S$107.2m, mainly due to contributions from ParkRoyal on Pickering which opened in Jan 2013.

Wait-and-see stance for the Seventy St. Patrick’s launch

The 555-unit Riverbank@Fernvale, launched in 1Q14, is currently 41% sold, whereas the residential component of The Espanade in Tianjin China is now 98% sold (average selling price of RMB 18.6k psm). The group indicates that the housing sector in Singapore continues to face headwinds and they would likely adopt a wait-and-see stance in terms of launching Seventy St. Patrick’s this year. Specifically, management pointed out that a potential catalyst for stronger demand for this project could be an announcement of an MRT station in its locality, and they could possibly time their launch in relation to that. We also note that the group now also plans to launch its Upper Paya Lebar project later this year while the Prince Charles Crescent site, won in a GLS tender in Apr 2013, will be launched in FY15.

Singapore 1Q RevPar growth in midsingle digits

Given residential uncertainties in Singapore, management will continue to focus on growing its recurring income businesses. The pre-commitment level at One KM, slated for opening in Sep-14, is now slightly above 80%. UOL reported that it was a firm quarter for its hotel in Singapore, with RevPar growing in the mid-single digits; in China, hotel performance in Xiamen improved while conditions in Suzhou remained challenging. Maintain BUY with an unchanged fair value estimate of S$6.95 (20% RNAV disc.).

Source: OCBC Research - 8 May 2014