Company Overview
UOL Group Limited is a Singapore-based property company. The Company’s segments include Property development, Property investments, Hotel operations, Investments, Technology operations and Management services. The Property development segment is engaged in the development of properties for sale. The Property investments segment is engaged in leasing commercial properties and serviced suites. The Hotel operations segment is engaged in the operation of owned hotels. The Investments segment is involved in the investment in quoted and unquoted financial assets. The Technology operations segment is engaged in the distribution of computers and related products, including the provision of systems integration and networking infrastructure services. The Management services segment is engaged in the provision of hotel management services under the Pan Pacific, PARKROYAL and PARKROYAL COLLECTION brands, project management and related services.
Investment Overview
Deep value developer with winnnig strategies. UOL Group is a leading developer and hospitality group with a diversified portfolio of prime commerical assets worth over s$20bn. The group has a track record of timing the propety market and landbanking well through property cycles, delivering steady returns to its shareholders.
Hospitality division on a rebound; strong visibility from robust pre-sales across its residential projects. UOL’s hospitality division will look to capitalise on the pent-up travel demand in 2023 with the re-opening Chinese market the swing factor to drive RevPAR higher, fueled by planned room expansions. Its residential projects are substantially sold with an exciting line-up of residential launches in 2023 to add to income visibility.
Strong sell-through rates a key datapoint to watch. Strong pre-sales for its residential projects are catalysts investors should watch for with 520-unit Pinetree Hill and former Watten Estate Condominium to be launched through 2023. Strong pre-sales for these projects will add to the almost c.S$1.5bn in pre-sales locked in 2022.
BUY call, TP SGD8.40 maintained pegged to 40% discount to our RNAV of SGD14.00. We continue to see value in UOL at 0.52x P/B and 0.48x P/RNAV below its – 1 standard deviation range. While ROE are expected to be ranging in the 3-4% (ex fair value gains), upside will come from better than expected performance from its hospitality division or higher selling prices achieved for its new launches.
We value UOL based on the sum-of-the-parts RNAV. Our TP of SGD8.40, pegged to a 40% discount to our RNAV, which implies 0.7x P/NAV at -0.5 SD below the historical average.
Risks
Refinancing risk. Rising interest rates are expected to crimp returns for its residential and commercial properties.
Government measures. With government maintaining a hawkish stance on property market, any cooling measures could have an impact on its sell-through rates.