OUE’s FY18 revenue fell 14.7%, due mainly to lower contribution from the group’s property development arm as well as healthcare income, though partially mitigated by better performances from its investment properties and hospitality divisions.

Increased contribution from Oakwood Premier OUE Singapore, which opened in June 2017, helped boost the hospitality division’s revenue by 7.5% to S$236.6m.

PATMI fell 89.4% to S$10.0m, on the back of lower net fair value gains on investment properties, as well as the goodwill impairment relating to the group’s investment in OUE Lippo Healthcare Limited.

The group has proposed a final dividend per share (DPS) of 1 S-cent, and a special dividend of 11 S-cents (FY17: 2 cents final DPS). We believe this dividend bump follows from the group’s divestment of the office components of OUE Downtown to OUE Commercial REIT, as highlighted previously.

We deem this set of results to be broadly under expectations. We maintain our BUY rating but place our FV of S$2.25 under review for now.

Source: OCBC Research - 27 Feb 2019