47.5 cents for 40,000 shares.
UOB came out back in Nov last year, highlighting a few of their solid development and investment properties
on hand. Since then, I’ve been studying the company to understand it a little better.
The company has been undervalued for a long while, and it continues to be so until the recent few years when they build up market cap to compete with the rest of the other big boys.
I feel there’s a lot of momentum for developer this year, hence I wanted to build a larger exposure apart from the other property play (Ho Bee) I have.
ROE – a combination of the two.
assets in residential, investment and hospitality which spreads across
different geographical area – Singapore, Australia and China. Apart from
properties, which took up the bulk of their activities, they also held some
stakes in SP Corporation, Hypak manufacturer and owns about 45% of Gul
technologies as part of the JV.
If you just read their financial statement alone in a single quarter, that’s enough to make you dizzy.
It is so extremely difficult to digest the full nature of their business.
operations in Grand Hyatt Melbourne and Hyatt Regency in Perth, which derived
about $4m nopat. It is still relatively small proportion compared with the rest of their income.
initiatives (AEI) for their hotels in Perth for an extended space so once it is
completed we will see some retail spaces beside the hotel.
Melbourne from $335m to $365m this year.
This is not a deal-breaker for me.
development at about 3.5% cap rates which will further add to the recurring
income portion of the earnings. 18 Robinson is also revalued upwards from $397m
to $486m this year, signalling an office demand and compressed cap rates.
This is one catalyst I am watching out for in 2018. This will be their big driver to the income from FY2018 onwards. I think we’ll see positive momentum coming out of this similar to Guocoland when they just completed their redevelopment on TPC.
This is a mid term play, which by then it will be sold it’ll probably be in the profits book by 2020. Again, not a big deal breaker for me right now. The sentiments are going to drive the momentum upwards though.
Apart from their property operations, they also own some businesses outside.
Tuan Sing owns 45% stake in Gultech, a PCB manufacturer. Since it’s already taken private, it’s hard to analyze this one. The company however, gives guidance on the performance of Gultech each quarter.
The company also owns some 80% of SP Corporation doing commodities trading and Tyres manufacturing. It delivered minimal on this one.
There’s almost close to zero chance the company can increase the yield up as their cashflow is tight given their recurring income is still very low.
The most likelihood deal is a special one-off dividend through divestment of their non-core business or through a reits spinoff in the making, but I doubt it will be the focus in the short term.
Until then, investors can forget about this being a yield play.
Comparison with other developers
If we trust the table above, companies with higher ROA and ROE should do well while momentum for developers pick up, but the moment the cycle is bearish, the metrics will go down massively as companies start to hoard their assets and not released it.