OUE Limited’s (OUE) 2Q18 revenue fell 19.6% YoY to S$150.7m, forming 25.3% of our full-year forecast. Excluding the contribution from the Development Property division in 2Q17, the group’s 2Q18 revenue increased by S$18.5m, or 14.0% YoY, buoyed by contribution improvement across most business divisions.

The group benefited from a full quarter contribution from Downtown Gallery and Oakwood Premier OUE Singapore, which opened in May 2017 and June 2017, respectively.

The group’s Healthcare division posted a 15.3% YoY drop in revenue of S$9.5m, due to lower revenue recorded by operations in China, as well as a weaker Japanese Yen in the quarter.

2Q18 PATMI fell 24.6% YoY to S$5.3m, mainly due to higher finance expenses. Adjusting for one-offs, we estimate core PATMI to be below our expectations at S$6.4m, which represents 12.3% of our full-year forecast.

We maintain our BUY rating for now, but place our fair value of S$2.25 under review.

Source: OCBC Research - 6 Aug 2018