Blockbuster end to a rough year
- Blockbuster end to FY23 with a 44% jump in profits, boosted by gains from sale
- Operating metrics improved across portfolio; additional S$1.1bn in residential sales provided earnings visibility
- Robust outlook for hospitality division as RevPAR remains on a firm uptrend
- BUY call; TP of S$8.40 maintained
(+) A blockbuster year from divestment gains. Higher revenue and EBIT in FY23 were driven by property development and recovery in hotel operations. UOL reported that FY23 revenue dipped 16% y-o-y to S$2,681m (FY22: S$3,201m) due to lower contribution from its property development segment (778%y-o-y/S$1, 210m), offset by a 38% y-o-y rise in revenue from its hotel operations (+38% y-o-y/S$762.8m). Revenue from its property investments (office & retail) came in stable y-o-y – at +2% to S$512.5m. Due to the sale of Parkroyal Kitchener Road, UOL booked a one-off realised gain of S$442.3m, boosting overall profit after tax and minorities (“PATMI”) of S$707.7m, +44% y-o-y. The group announced a special dividend of 5 Scts a share on top of its ordinary dividend of 15.0 Scts, bringing total dividends to 20 Scts for FY23 (18 Scts in FY22). ROE rose to 6.5% (vs. 4.7% in FY22).
EBIT margins strengthened to 23.6% from 21.3% (FY22) largely due to higher EBIT contributions from i) a turnaround in hotel operations; and (ii) improvement in property development (mainly from SG) margins, offsetting the slip in margins from its property investments, which we reckon was due to the impact of higher utility costs. Operating cashflows improved to S$808.8m (FY22: S$141.7m) largely due to a positive working capital of +S$227.6m (FY22: -SGD583m) based on collections from progressive completion of its development projects.
(+) We saw a general improvement in operational statistics across the portfolio. Property development divisions saw close to c.S$1,100m in bookings (vs. c.S$1,550m) due to a lower number of new launches for the year (312 units vs. 703 units sold a year ago). Retail committed occupancy improved to 99.4% on the back of an 18.1% rise in footfall, implying healthy operating metrics. Its Singapore office committed occupancy rose marginally to 91.8% respectively as of Dec ’23, an improvement from Jun ’23. Its overseas office properties also saw a slight improvement, with UK up on a h-o-h basis to 85.1% (+0.6% h-o-h) and 100 for Australia assets. In term of its hospitality division, we saw a jump in RevPAR on the back of recovering travel demand for Singapore (S$233/night, +23% y-o-y), Oceania (S$143/night, +13% y-o-y), and others (S$97/night +47% y-o-y).