UOL    Last:5.74    -0.05

Resilient high-end residential market

UOL is on an aggressive land bank trail, with its latest acquisition being Oakswood Heights. To be developed with Spottiswoode Apartments, we estimate attributable gains of $98 million from this project. Current residential take-up remains strong, with higher selling prices being recorded. Further growth impetus could come from recent government land sales. Overseas, UOL's residential project in Jalan Conlay is expected to yield about $136 million.

We have raised our FY08-09 earnings forecasts by 7-20 per cent and our end-CY08 RNAV estimate to $7.14 (from $6.67) to account for contributions from UOL's latest projects and higher residential prices and office rentals.

Accordingly, our target price has been lifted to $7.14 from $6.00, and is now set at parity to end CY08 RNAV estimate (against end CY07 RNAV estimate previously). Maintain 'outperform'.
OUTPERFORM

 

UOL Group


June 25 close: $5.90
CIMB RESEARCH, June 25



 

 

UOL Group Ltd

Buys site adjacent to landbank.

announced more land acquisition. This time it is an adjacent site to one which

it already owns at Spottiswoode Park Road off Keppel Road. This much larger

site has been acquired at a higher price of S$132m, however as the previous

site was bought at a lower cost, the amalgamation of both sites is positive to

UOL. We estimate that the amalgamation would also improve efficiency of the

site and hence increase the net saleable area and hence lower overall

breakeven. We estimate the breakeven of the combined sites to be about

S$1000psf and assuming a selling price of say S$1500psf, a pretax of S$140m

is possible. This in turn would have positive 11-cent accretion to our RNAV

which we now revise up to S$5.48.UOL Group Limited (UOL) recently

Other developments.

development. This involves UOL taking up a 50% stake in a subsidiary of

Kheng Leong Co Pte Ltd (KLC). KLC is owned by the Wee family, who is also

a substantial shareholder of UOL. It is difficult to read the intentions of the

Wee family or the purpose of the investments by UOL. However, a closer

working relationship between the 2 companies is a strong possibility. This

could be in the form of a JV in development projects that either one currently

owns or a JV for acquisition of new projects. A third possibility is for UOL to

eventually acquire KLC from the Wee family.Over the past month there has also been another

Downgrade on valuation.

very well rising from S$4.90 to the current trading range of S$5.60, or a rise of

over 14% within a month. More importantly it has risen past our previous fair

value of S$5.37 and currently stands close to our revised fair value of S$5.48.

As for ratings, even though we continue to like UOL for its mid-end residential

exposure as well as its exposure to the commercial sector, we see limited

upside from current levels. We thus downgrade our rating on UOL from BUY toSince our last report dated 14 May, UOL has done

HOLD.

Downgrade on valuation

SINGAPORE Company Update

Winston Liew

(65) 6531 9819

e-mail: wliew@ocbc-research.com

15 June 2007

Downgrade to

HOLD

Previous Rating: BUY

S$5.60

Fair Value: S$5.48

Stock Code:

Reuters: UTOS.SI

Bloomberg: UOL SP

Event: Update

General Data

Issued Capital (m) 796

Mkt Cap (S$m/US$m) 4,455 / 2,888

Major Shareholder Wee Family

(34.0%)

Free Float (%) 61.0

NTA per share (S$) 3.95

Daily Vol 3-mth (?000) 2,357

52Wk High (S$) 5.800

52Wk Low (S$) 2.630

 

Hit high Bollie band

 

Report from CLSA's Emily Loh ,emily.loh@clsa.com

Laggard play

As the Singapore property sector becomes increasingly priced to
perfection, here?s a Singapore-centric play that is still worth looking at.
Currently trading at 35% discount to end-08 NAV, UOL is one of the last
few value plays left in the domestic property space. We continue to like
the Company for its exposure to Singapore residential, offices in Novena
as well as hotel exposure through stakes in Hotel Plaza and hotels in the
Marina area. We maintain our Buy recommendation, target price S$6.38.

The Red Dot gets bigger

The Singapore property market has seen a robust 2006 which was reflected
by UOL?s business segments. Two of UOL?s residential projects launched were
fully sold out within weeks from launch, with The Regency launched in
October 2006, selling at the price range of S$750 ? S$1000 psf, a high for the
suburb. The recent completion of extension and re-branding of Velocity @
Novena Square is expected to boost retail income. Management has guided
50% rental lease renewal in United and Novena Square offices for FY07 that
will lock in rental rates at an estimated 8% YoY increase to S$5.50psf.

Acquisition of Negara at Claymore in Aug 2006

UOL successfully acquired 100% of Negara at Claymore (former Hotel
Negara) in Aug 2006 at the mandatory offer (S$6.45 psf share) for remaining
shares in Hotel Negara Limited, post acquiring a total of 54.5% stake from
affiliated companies - UOB, OUH, OUI (Overseas Union Insurance) and OUF
(Overseas Union Facilities). The purchase consideration of the whole
transaction was about S$135m.

A catalyst given rising residential prices in prime Districts 9 & 10

Negara at Claymore is currently being zoned for commercial hotel use with a
plot ratio of 4.9x. With prices in the prime Districts 9 and 10 rising swiftly and
steadily (prices at recently launched Cuscaden Royale reached S$2,800-3,000
psf and Orchard Residences touted to launch at S$3,000), UOL could reap
more value from the site by applying for the site to be rezoned and
redeveloped for high-end residential use.

Buy UOL

We maintain our existing target price S$6.38 pegged to 15% discount to end08 NAV of S$7.50 (end-07 NAV S$6.53). UOL will announce its 1Q07 results
soon. Judging from the good performance of Singapore results released by
UOL?s listed peers, we believe UOL?s 1Q should also come in strongly.
 

 

UOL buys Pan Pacific brands which cover 12 hotels

 

They had just announced yesterday the acquisition of No.70 Spottiswoode Park, Spottiswoode Apartment.

 

Wow at 1535hrs, 260lots done at $5.30. Look good. Just my thought

 

At 1504hrs, 599 lots done at 5.20. Look like buyers coming in.

 

At 1612hrs, 197 lots done at $5.10 together 473 lots done at $5.10. Who have so much money?

 

Notice at 1602hrs, a single transaction of 276 lots done. Hope for a better weeks ahead

 

Recently, CIMB-GK had set a target price of 5.94 and DBS Vickers set 6.10 for UOL. Any comment on the TA trend? Thank you.

 

With WCY support, down side limited.Rebound will be fast and sharp this week.

 

Hi paulng,

UOL may be on a very short-term TA downtrend. However, it may just be the poor market condition in general.

 

Wee Cho Yaw bought quite a lot of his shares, more than 4,000 lots over 2 days. Think UOL will pick up this week?

 

It said it would invest about US$22.5 million to develop property in Hanoi, Vietnam through a joint venture with Orix Corp of Japan.

 

I think UOL has still more upside to it.

 

Hi,  any advise from folks on UOL.....  thinking of selling  Thank you !!

 

Mixed reaction from analysts after 3Q results. OCBC downgraded the stock to Hold. DMG maintained Hold. CLSA, DBS and CIMB are positive on the stock.

Company	Broker	Report Date	Recommendation	Report Price	Target Price
UOL Group	CIMB	11/2/2006	Outperform	S$3.92	S$4.70 +
UOL Group	DBS	11/2/2006	Buy	S$3.92	S$4.82 +
UOL Group	OCBC	11/2/2006	Hold -	S$3.92	S$4.04
UOL Group	CLSA	11/1/2006	Buy	S$3.92	S$4.93
UOL Group	DMG	11/1/2006	Hold	S$3.92	S$3.90

 

Closed 4.02 today. Anyone know when will the 3Q result be out ?

 

gosh, really wish I could had hold it longer....look at the horse run now...