OUE reported 3Q14 PATMI of S$16.5m, up 23.1% YoY mostly due to recognition of the group’s share of the results of OUE Hospitality Trust and contributions from retail mall One Raffles Place which re-opened in May 2014. That said, 3Q14 topline declined 10.8% YoY to S$106.3m due to the absence of contributions from two Chinese hotels divested in Sep 2013 and lower revenues from the property development division.

Overall, we judge 3Q14 results to be in line with expectations. Management reports that it has begun work on the 10-storey extension building to the Crowne Plaza Changi Airport Hotel in Aug-2014, which will add 243 hotel rooms to the asset when it completes in 2015. Asset enhancement works at OUE Downtown and U.S. Bank Tower’s observation deck and lobby are also underway. Maintain BUY with an unchanged value estimate of S$2.69 (20% discount to RNAV).

Source: OCBC Research - 6 Nov 2014