SINGAPORE (May 15): Maybank Kim Eng is reiterating its “buy” call on UOL as its top sector pick, raising its price target to S$8.30 from S$7.93 to reflect the higher market value of UIC and target price of UOB.
In a Monday report, analyst Derrick Heng says there were no surprises from UOL’s latest results announcement, with the Clement Canopy enjoying a good launch as well as the renewal of all retail leases due for expiry this year.
(See also: UOL posts 4% rise in earnings to $80.3 mil)
He adds that while the group’s recent acquisition of 45 Amber Road offers stronger earnings visibility, strong take-up at Seaside Residences and improving sales at Marine Blue will bode well for this project.
The group’s expansion of its presence in Melbourne with its acquiring of Hilton Melbourne South Wharf at a “reasonable price” further adds to its income base, in his view.
(See also: UOL acquires Hilton Melbourne South Wharf for $246 mil)
“We continue to see good value in the stock with 17% upside to our revised TP after a stellar 21% increase since our initiation in early Dec last year. UOL’s mid-to-mass market focus ensures quick inventory turnover which lowers developer risk” says Heng.
Including pro-rata exposure to UIC, Maybank estimates that UOL offers a 30% exposure to the Singapore office market, and therefore sees UOL as a beneficiary of improving sentiment in this sector.
“Furthermore, by accumulating shares in UIC at its depressed share price, we believe UOL is effectively buying into its properties at half of their value,” concludes the analyst.
As at 12.47pm, shares in UOL are trading 4 Singapore cents higher at S$7.11, while UOB is down by 1 Singapore cent at S$23.58. — theedgemarkets.com.sg
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