UOL H2 profits up 127%; dividend of S$0.15 per share proposed for FY2021

UOL Group’s net profit grew 127 per cent year on year to S$216.1 million for the second half ended Dec 31, 2021, up from S$95.3 million for the corresponding period in 2020.

With this, the mainboard-listed property company reported a 2,239 per cent jump in full-year earnings from S$13.1 million to S$307.4 million, and proposed a first and final dividend of 15 cents per share for FY2021.

In a bourse filing on Monday (Feb 28), UOL said its FY2021 earnings were largely driven by fair value and other gains of S$73.8 million, compared to fair value and other losses of S$246.7 million in FY2020.

Group revenue for the full year grew 32 per cent to S$2.6 billion, and this was driven by contributions from property development and hotel operations, it added.

Earnings per share for FY2021 stood at 36.41 Singapore cents compared with 1.56 Singapore cents a year ago.

On a closer read, UOL’s property development segment saw the biggest jump in revenue in the year – it rose 67 per cent to S$1.6 billion despite drops in revenue from Park Eleven, Amber45 and V on Shenton.

UOL attributed this to higher progressive recognition of revenue from Avenue South Residence, The Tre Ver, Clavon and The Watergardens at Canberra, as well as revenue recognition from sales of units at The Sky Residences in London. 

Meanwhile, revenue from property investments fell marginally to S$502.2 million in FY2021, from S$503.3 in FY2020, as H2 revenue fell 5 per cent from S$264.5 million in FY2020 to S$252.4 million.

In a call with reporters following the release of the results, its chief executive Liam Wee Sin pointed out that the latest set of property cooling measures announced last December has had a dampening effect on the residential market. 

“We see the residential sector continuing to be resilient despite the dampening effect of the cooling measures. However, the impact and take-up rate of various projects is expected to be uneven. Going forward, we also see concern about rising costs and supply chain disruption,” he added.

Liam noted in particular that the recent outbreak of war in Ukraine will escalate the costs of raw materials and logistics.

UOL does not expect a sharp price correction from the implementation of the cooling measures, however, he stated.

Hotel operations saw a 14 per cent increase in FY2021 revenue to S$35.5 million. UOL attributed this to the reopening of PARKROYAL COLLECTION Marina Bay in December 2020, Pan Pacific Perth securing a Government Quarantine Facilities contract last year, and the opening of Pan Pacific London in September 2021. 

Technology operations reported a 13 per cent decrease in FY2021 revenue to S$189.4 million due to delays in fulfilling sales orders due to global supply constraints, it added.

UOL expects Grade A office demand in Singapore to improve as there is a “flight to quality” to new and higher specifications office buildings. 

On the retail front, shopper footfall is still below pre-pandemic levels, but recovery in consumer sentiment and eventual return of tourist spending will help stabilise the sector, it said.

The company also believes that the hospitality sector in Singapore, UK and Asia Pacific may see signs of recovery as borders gradually reopen.

UOL’s net asset value per ordinary share is S$12.04 as at Dec 31, 2021. Asked what the group intends to do to narrow the discount between this figure and its share price, its chief investment and asset officer Jesline Goh said it will continue looking into extracting value through asset enhancements.

Probed if UOL will be making any divestments, Liam said the group is looking at “reconstituting” its asset portfolio – “divesting potentially some of our assets and, at the same time, acquiring new ones that are more strategic”.

“We are definitely looking at making sure that we undertake what is likely to impress our shareholders in terms of value and give them desired returns in due course,” he added.

Shares of UOL closed down 1.8 per cent at S$6.98 on Monday.