OUE profit jumps to S$255m on divestment, development gains

Singapore

PROPERTY group OUE made a net profit of S$255.2 million in 2019, up from the S$10 million it made in 2018 on a jump in development income and divestment gains.

Revenue in the 12 months ended Dec 31, 2019 rose 44.8 per cent to S$930.8 million, led by a S$283.7 million jump in income from development properties to S$350 million.

This was due to higher revenue recognised on the sale of OUE Twin Peaks units sold under the deferred payment schemes, as well as revenue recognised on the sale of the property development at 26A Nassim Road, OUE said.

Share of results of equity-accounted investees rose by S$130.4 million in 2019, due mainly to the inclusion of contribution from Gemdale Properties and Investment Corp with effect from May 31, 2019, offset by the absence of contribution from OUE Hospitality Trust with effect from Sept 4, 2019.

OUE also booked a S$136.6 million gain on disposal of its minority stake in Aquamarina Hotel in April 2019.

A final dividend of five Singapore cents was proposed, to be payable on May 28. That brings total dividend to six Singapore cents for 2019.

In the fourth quarter last year, a final dividend of 12 Singapore cents was proposed.

OUE said that despite limited hotel supply expected in the next three years coupled with biennial events, the hospitality business is expected to face significant challenges in 2020 due to "lower travel confidence" amid the coronavirus outbreak.

In the Singapore office market, Grade A CBD core office rents increased 0.9 per cent quarter-on-quarter in Q4 to S$11.55 psf per month, marking the 10th consecutive quarter of growth.

"With demand levels moderating and limited new Grade A office supply in the near future, office rent growth is expected to taper off and office rents are estimated to remain stable," OUE said.

It added: "In Los Angeles, vacancy continued to decline in the fourth quarter to 13 per cent, with the market expected to continue to tighten. In Shanghai, vacancy rates in the CBD were 12.4 per cent for the fourth quarter, with office rents moderating to 10.10 renminbi (S$2) psm per day. With uncertainty in the economy linked to trade tensions and Covid-19 outbreak, rental growth is expected to be subdued in the near term."

OUE shares rose one Singapore cent or 0.7 per cent to S$1.44 on Thursday before results were announced after market close.