Friday, March 1, 2013

UOL sees property demand, prices easing

Group's full-year profit rises 19% to $807.7m; revenue down 42% to $1.1b

The Business Times |  MARCH 01, 2013

UOL Group, which yesterday posted a 19 per cent rise in full-year net profit to $807.7 million, said it expected demand and prices for residential property to fall in the aftermath of the latest cooling measures.

Said Gwee Lian Kheng, UOL's group chief executive: "The recent cooling measures and the latest property tax changes by the government in Singapore will dampen overall demand and moderate prices.

"We remain cautious and selective in our land acquisitions and will continue to reinforce our recurrent income streams and focus on improving the performance of our property investments and hospitality."

The group will also stay away from the luxury market for now.

"I think the luxury market is in for a very hard time. . . If I were to go in now I would go for the mass, or possibly lower end, type of market. For high end, I think I would go into hibernation for a while," said Mr Gwee.

The rise in UOL's full-year net profit came despite a drop in income from property development and its associated companies - which fell on lower development profit from Nassim Park Residences following its completion in the first quarter of 2011, and a lower share of profit from Marina Centre Holdings (MCH) and United Industrial Corporation Ltd (UIC) due to the closure of Pan Pacific Singapore from April to August 2012 for major renovations.

What propped up its bottom line, it said, were recurring income streams from the rentals of offices and shopping malls, and fair-value gains from investment properties.

Excluding fair-value gains on investment properties, other gains and losses and income tax, group profit was 40 per cent down at $439.7 million, from FY 2011's $727.8 million.

Earnings per share was $1.05, compared with 88.12 cents last year. Revenue fell 42 per cent to $1.1 billion.

Fair value gains on UOL's investment properties, as well as its associated companies' investment properties, soared in FY 2012 from a year ago.

Its associated firms' fair-value gains surged more than 11 times to $107.5 million from $8.7 million last year. This was due largely to gains from UIC and MCH.

MCH is 23 per cent owned by UOL and 57 per cent owned by UIC's subsidiary Singapore Land. UOL owns slightly over 43 per cent of UIC.

UOL's own investment properties enjoyed a more than doubling in fair-value gains, to $442.1 million from $187.2 million. This stemmed mainly from gains made in United Square and Novena Square, said the group.

The property development business, which traditionally accounts for the bulk of UOL's operating profit, saw a sharp 64 per cent drop in operating profit to $147.5 million from $404.8 million in FY 2011. This was due to lower sales of residential units following the completion of some of its development projects.

Property investments, the second-largest contributor to operating profit, rose $119.7 million from $112.6 million.

Operating profit of its hotel operations inched up one per cent to $59.8 million from $59.5 million.

UOL owns 82 per cent of Pan Pacific Hotels Group, which runs the namesake Singapore hotel in Marina Centre and owns Parkroyal Hotels in Beach Road, Kitchener Road and Upper Pickering Street.

Pan Pacific Hotels Group posted a 21 per cent drop in FY 2012 net profit to $71.2 million from $89.6 million. Revenue rose 4 per cent to $372.6 million from $358.2 million.

Yesterday, UOL's shares closed 1.1 per cent higher at $6.51. It has proposed a first and final dividend of 15 cents a share.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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