UOL Group is still keen on selectively replenishing its Singapore residential landbank even though it expects the market to remain subdued for a while.
The group yesterday posted a 51 per cent year-on-year drop in second-quarter net earnings due to sharply lower fair value gains from investment properties.
When contacted, UOL president (property) Liam Wee Sin told BT that the group will continue to selectively buy Singapore residential development land in locations that have good connectivity and which have strong growth story. "As you would have noticed, most of our recent site acquisitions have been in Rest of Central Region (RCR) - for example Upper Paya Lebar and Prince Charles Crescent - as this region has shown greater price resilience."
The group's Thomson Three condo, which is also in RCR, has to date achieved sales of 92 per cent of the project's 445 units, with UOL maintaining its average price at around $1,330 psf. The 99-year leasehold project was launched in September last year, after the introduction of total debt servicing ratio (TDSR) framework in late June 2013.
The group plans to launch its Seventy St Patrick's residential project later this year. The plan is to release in the first half of next year a condo in Upper Paya Lebar, with the majority of its nearly 800 units comprising one and two-bedders. Also slated for launch next year is a condo project along Prince Charles Crescent.
The group's chief executive Gwee Lian Kheng noted in a statement yesterday that "we expect the residential property market to remain subdued for a while" - citing declining home prices and the record number of private home completions between now and 2016.
The property and hotel group posted net profit of S$211.72 million for Q2 2014 - a 51 per cent drop from the same year-ago period. The decline was largely from lower fair-value gains on investment properties.
Fair value gains from the group's investment properties fell 75 per cent to S$85 million while gains from associated companies' investment properties eased 21 per cent to S$52.5 million.
Group revenue declined 30 per cent year-on-year to S$213.6 million on the back of a 73 per cent drop in revenue from property development to S$36.6 million. Unlike in Q2 2013, the latest Q2 did not see revenue from two residential development projects - Waterbank at Dakota and Spottiswoode Residences - which were completed in May and December last year respectively.
On a more positive note, revenue from property investments climbed 8 per cent to S$47.6 million, boosted by contribution from Pan Pacific Serviced Suites Beach Road, which opened in May 2013. Gross revenue from hotel ownership and operations too rose 2 per cent to S$104.5 million, with higher contributions from Parkroyal on Beach Road and Parkroyal on Pickering.
Share of profit from associated and joint-venture companies surged 56 per cent to S$38.4 million - due mainly to higher contributions from the Pan Pacific Singapore hotel, and the Archipelago and Thomson Three residential projects.
Earnings per share halved to 27.45 Singapore cents for Q2 2014 from 56.03 Singapore cents in Q2 2013. Net asset value per share stood at S$9.15 at end-June this year, up from S$8.77 last Dec 31.
The counter ended nine Singapore cents lower at S$6.41 on Friday. UOL annnounced its results after the stock market closed.
Mr Gwee noted that travel patterns in the near term could be affected by rising geo-political tensions. However, the group was "still positive about the long-term prospect of the hotel industry (and) will continue to seek out new opportunities to expand into strategic gateway cities", he added.
As in the previous year, UOL will not be paying a Q2 dividend.
For the first-half, UOL's net profit fell 34 per cent to S$332.55 million. Revenue was 13 per cent higher at S$622.39 million.