• FY15 results in line with expectations
• Dividend of 15.0 S-cents proposed
• Maintain BUY with unchanged S$7.43 FV

FY15 PATMI down due to absence of Jalan Conley divestment gain

UOL reported that its FY15 PATMI decreased 43% to S$391.4m mainly due to smaller fair value gains from the group’s investment properties portfolio and the absence of a onetime divestment gain from the sale of a site in Jalan Conley, Singapore booked in FY14. In terms of the topline, FY15 revenues fell 6% to S$1,279m similarly due to the impact from the Jalan Conley divestment last year.

If we had adjusted for the sale, we note that FY15 revenues would have increased 12% given stronger contributions from the group’s core development, which rose 27% to S$557.5m from stronger progress recognition at Singapore projects, and higher revenues from investment properties, which also rose 11% to S$219.4m from new contributions from the newly-opened OneKM mall, but partially offset by weaker contributions from the group’s hospitality segment which were impacted by refurbishment works as well as weak market conditions at Pan Pacific Perth and ParkRoyal Yangon.

Overall, we judge these results to be in line with our expectations and note that FY15 earnings made up 100.4% of our forecast. A first and final dividend of 15.0 S-cents per share was proposed.

Maintain BUY; see long term value here

Over the year, the group sold about 850 domestic homes with total sales coming in above S$900m. While the pace of sales have come down significantly for newly-launched projects, such as Principal Garden which remains about 22% sold as at end 4Q15 (mostly unchanged from end 3Q15), we believe that the group’s prudent approach to land-banking, its diversified portfolio with a substantial investment property component, and its strong balance sheet would buttress against market headwinds going forward.

At current price levels pointing to a 42% discount to book and a 43% to our RNAV estimate, we believe that the share price presents value to investors with longer term horizons. Maintain BUY with an unchanged fair value estimate of S$7.43.

Source: OCBC Research - 29 Feb 2016