OUE’s 3Q20 results came in broadly within our expectations. 3Q20 revenue fell 52.5% YoY to S$134.2m, dragged by weaker performances from all divisions (Investment Properties: -9% YoY; Development Properties: -75% YoY; Hospitality: -62% YoY). PATMI recovered from a loss of S$207.2m in 1H20 to a profit of S$2.0m in 3Q20 (-98.4% YoY).

OUE completed the sale of U.S. Bank Tower for US$230m in 3Q. Part of the proceeds was used to pare down US$183.3m of debt as mentioned by management previously as one of the rationale for the disposal of U.S. Bank Tower. As such, net gearing improved from 57.8% to 49.7%.

No further refinancing requirement for OUE until 2022. After adjustments, our fair value estimate remains at S$1.22. HOLD.

Source: OCBC Research - 19 Nov 2020