Dear UOL board: don’t stay a crouching tiger, unleash the hidden dragon in the stock

PROPERTY developer UOL Group has been making astute investments and executing well on various fronts of late. However, this good work may be wasted as the market marks down the value of assets that the group holds. As at Oct 16, UOL traded at a 59 per cent discount to end-June’s net asset value (NAV) per share of S$13.19.    

With lower interest rates, UOL should seize the opportunity to optimise its balance sheet, drive higher return on equity (ROE) and grow in fund management. The group can actively embrace capital-efficient ways of holding its investment properties and hospitality assets. This could possibly be through listed real estate investment trusts (Reits) and business trusts, or private funds.

While the Urban Redevelopment Authority’s flash estimate of private-home prices in the third quarter showed a quarterly decline, there is demand for the right projects, even in the prime segment which is reeling from the high taxes that apply to foreigners, who are not permanent residents, buying homes here.