OUE delivered an in-line set of 3Q18 results. Revenue rose 0.8% YoY to S$183.3m, mainly due to higher contributions from the group’s hospitality and development property divisions, with the latter stemming from the recognition of revenue of OUE Twin Peaks units sold under the deferred payment scheme.

However, the group’s healthcare division saw a 57.0% YoY decline, due to lower revenue recorded by OUE Lippo Healthcare’s operations in China. The group recorded ‘other’ losses of S$13.4m as compared to a gain of S$11.1m in 3Q17, primarily due to a net change in fair value of investments.

All considered, PATMI fell sharply by 80.7% YoY to S$2.1m. However, core PATMI came in at S$15.4m (stripping out the effects of FV movements of investments and loss on disposal of interest in subsidiaries), forming 29.9% of our full-year forecast.

Pending an analyst briefing, we maintain our BUY rating, but place our fair value of S$2.25 under review.

Source: OCBC Research - 12 Nov 2018