• 1Q15 profit dip due to one-off gain
• Botanique now 38% sold
• Low single digit dip for hotel Revpar

1Q15 profit declined YoY due to absence of one-time gain

UOL announced that its 1Q15 PATMI decreased 39% YoY to S$74.2m mainly due to the absence of a one-time S$44.3m divestment gain from the sale of a land site at Jalan Conley, Malaysia, which was recognized in 1Q14, and higher finance costs from unrealized foreign currency losses in 1Q15 from USD borrowings for its Chinese investments.

This was partially offset by lower marketing and distribution costs and higher share of profits from JV/associates over the latest quarter. Excluding the gain from Jalan Conley, 1Q15 adjusted PATMI would have decreased a smaller 3% YoY. In terms of the topline, 1Q15 revenues similarly declined 42% YoY to S$238.3m mostly due to the effect of the Jalan Conley divestment, partially offset by increased contributions from the property development segment.

Overall, we judge 1Q15 numbers to be within expectations and 1Q15 PATMI now constitute 19% of our full year forecast.

Firm performance at Botanique condo launch

The recent launch at the 797-unit condominium project, The Botanique, has been fairly successful, with 302 units sold to date at an average price of S$1290 psf out of the 550 units released. We understand that the development at Prince Charles Crescent would likely be launched in 2H15, and the group will continue to be selective in replenishing its land-bank in the uncertain domestic residential market.

Management indicates that about 40% and 35%-40% of its office and retail portfolio, respectively, are up for lease renewal over the current year and expects to see positive rental reversions in the single digits. The group’s hotel portfolio faced some headwinds in 1Q15 with Revpar decline in the low single digits, as conditions in key markets remain difficult.

Specifically, in Singapore, management indicates that the new supply of hotel rooms and weaker growth in tourist arrivals continue to weigh on performance and 1Q15 Revpar has dipped 8% - 10% YoY. Maintain HOLD with an unchanged fair value estimate of S$7.97.

Source: OCBC Research - 13 May 2015