UOL back in the black with S$91.3m profit for H1

UOL Group posted a S$91.3 million net profit for the first half of this year, a turnaround from its net loss of S$82.1 million for the corresponding period last year.

This was thanks to a substantial increase in revenue from property development and a sharp drop in fair-value losses, the property company announced on Thursday evening.

Revenue grew 31 per cent to S$1.19 billion during the six months ended June, from S$908.2 million in the year-ago period, driven by higher contributions from both property development and property investments.

Earnings per share stood at 10.82 Singapore cents, versus a loss per share of 9.74 cents in H1 2020.

The group’s attributable fair-value losses shrank to S$16.9 million for the six months, from S$185.8 million in the year-ago period.

The development segment recorded a 91 per cent surge in revenue to S$687.5 million, on higher progressive revenue recognition from Avenue South Residence, The Tre Ver, and Clavon in Singapore. This was partly offset by lower revenue from Amber45 and V on Shenton in Singapore, as well as Park Eleven in Shanghai, China.

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Meanwhile, revenue from property investments rose 5 per cent to S$249.8 million in the first half.

In contrast, hotel operations, technology operations and investment income revenues declined. 

Hotel operations’ revenue fell 8 per cent to S$126.1 million due mainly to the impact of the Covid-19 pandemic on Singapore’s hospitality industry, with a marked reduction in government quarantine facility contracts in H1 2021. However, hotels in China brought in higher revenue as the country’s tourism industry recovered further.

UOL’s hospitality business has been focusing on staycations and weddings in the domestic markets, with travel curbs still in place amid the pandemic. It also added hybrid studios to Pan Pacific Singapore and Parkroyal Collection Marina Bay to tap the hybrid-meetings market.

Liam Wee Sin, the group's chief executive, said: "Despite healthy demand in Singapore's private residential market, we remain concerned about rising construction costs due to manpower shortage and supply-chain disruptions."

The pandemic’s impact has also “prompted rethinking on the usage, design and space requirements of the various real estate asset classes”, he said. “There is a need for a more flexible planning approach to adapt and respond to changes such as hybrid working, accelerated online shopping, and the increased focus on health and well-being and climate change.”

UOL expects office rents in Singapore to continue rising in the near term amid steady demand from growth sectors such as technology and media, wealth management, family offices and healthcare. However, in the medium term, the office rental market may face headwinds as more companies review their workspace requirements, UOL said.

On the retail front, rents are likely to remain under pressure, albeit at a slower pace than before as the market may benefit from improved economic activity and consumer sentiment with the roll-out of Covid-19 vaccines, UOL noted.

The showflat for UOL’s 448-unit, 99-year leasehold project, The Watergardens in Canberra, was closed from July 21 in view of Singapore’s return to Phase 2 (Heightened Alert), shortly after having opened for a preview on July 17. On Thursday, UOL said there was “healthy visitorship” during the preview weekend, and that the showflat will re-open on Aug 14.

The Watergardens will likely launch by the end of this month, Mr Liam said. He added that UOL is thus far sticking to the price guidance provided back in mid-July, when it had indicated prices would start from S$1,380 per square foot. 

No dividend was recommended for H1 2021, the same as the year-ago period, as UOL does not usually declare interim dividends.

Shares of UOL fell 0.4 per cent or S$0.03 to close at S$7.23 on Thursday, before the results were released.

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