• 200 out of 250 units launched
• Stable earnings profile
• Undemanding 0.66x PB

Over 200 units sold at The Clement Canopy

It was recently reported that the group has sold 200 out of the 250 units launched for sale at its 505-unit condominium project, The Clement Canopy, at average selling prices of S$1.3k to S$1.4k psf. To recap, the 99-year leasehold project is a 50:50 JV between UOL and Singapore Land and is located near the National University of Singapore and the Clementi MRT station.

The consortium acquired the 140.3k sq ft site (with a maximum GFA of 491.2k sq ft) through a successful S$302.1m tender at a government land sale exercise in Dec 2015. The acquisition price translates to S$615.04 psf and we estimate breakeven prices at S$1.0k to S$1.1k psf.

Given the muted domestic residential market, we view this as a healthy launch performance and are encouraged at UOL’s continued ability to create value through projects with good location and product attributes.

Enjoys a relatively stable earnings profile

We like that the group enjoys a relatively stable earnings profile in an uncertain operating environment; as at end 2016, about 82% of UOL’s operating profits are derived from recurring income sources including property investments, hotel operations, investments and management services, with above 90% occupancy rates achieved for almost all its commercial properties in Singapore.

We understand that management continues to seek attractive investment properties and have recently entered into a deal to acquire the Hilton Melbourne Wharf for A$230m (c.S$246.1m), which will be rebranded as a Pan Pacific Hotel. In addition, we see current valuations of its share price to be undemanding at 0.66x price-to-book, particularly with its healthy balance sheet with 24% gearing ratio and S$301.5m cash. Maintain BUY with an unchanged fair value estimate of S$7.30.

Source: OCBC Research - 9 Mar 2017