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United Engineers Q3 profit lifted by S$65.2 million net revaluation gain

REVALUATION gains from four investment properties lifted United Engineers' (UE) net profit to S$84.8 million in the third quarter, up from S$7.7 million in the same period a year earlier.

Excluding the net revaluation gain of S$65.2 million, net profit would have been S$19.6 million, an increase of 156 per cent from the same period a year earlier.

UE commissioned the independent external valuations after controlling shareholder Yanlord Investment triggered a mandatory general offer for all the shares in UE that it did not own on Oct 25.

Revenue in the three months ended Sept 30 rose 38 per cent to S$112.4 million, due mainly to a S$35.3 million increase in property development revenue from phase 5A of Chengdu Orchard Villa upon project completion and handover. Revenue from Chinese projects is recognised under the completed contract method.

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Phase 5B is scheduled to be handed over by end 2019. Demand for good quality housing remains, and China's residential property market may continue to see sustainable growth in the longer term despite cooling measures and slower economic growth in the near term, UE said.

In Singapore, slower economic growth is also weighing down sentiment in the private residential property market. Nonetheless, UE is scheduled to launch Dairy Farm Residences for sale by the end of November, it said.

Meanwhile, the improvement work for the commercial block at UE BizHub WEST has been substantially completed and will help to contribute to the group’s recurring rental income, it said.

Going forward, UE will also focus on executing its residential projects in Singapore and China, including Shenyang Orchard Summer Palace (Residential) and Shanghai Olympic Garden Phase 3.2, while undertaking selective asset enhancement work for its investment properties in Singapore, it said.

UE group managing director Roy Tan said in the results filing on Monday night: "Whilst global economic uncertainties and trade tensions continue to weigh on investment sentiments, the group will seek investment and partnership opportunities and make selective property acquisitions."

Third-quarter earnings per share was 13.3 Singapore cents, up from 1.2 Singapore cents in the third quarter last year.

Net asset value per share was S$3.22 as at Sept 30, up from S$3.13 as at Dec 31 last year.

UE shares fell one Singapore cent or 0.38 per cent to S$2.65 on Monday before results were released after market close.