SINGAPORE (Nov 8): DBS is reiterating its “buy” call on UOL Group following the group’s purchase of additional shares in property group, United Industrial Corporation (UIC).
However, as the group has achieved the research house’s target price of $8.73 previously, the current target price is under review pending the group’s results announcement.
In an SGX filing on Monday, UOL announced that its wholly-owned subsidiary, UOL Equity Investments, has increased its interest in UIC, purchasing an additional 110,000 shares in the open market at $3.34 per share, bringing UOL’s shareholding in UIC up marginally to 48.52% from 48.51%.
Including the remaining stake held by Haw Par in UIC, the total shareholding owned by the whole group (Wee Concert Party) inches up a little from 49.18% to 49.19%.
Earlier in June, UOL acquired about 60 million shares in UIC for $3.50 per share from Haw Par via a share swap, which is above the paid price for the UIC shares bought on Monday.
In a Tuesday report, analyst Rachel Tan says, “While the intention of the Wee Concert Party remains unclear as UOL had previously requested for a whitewash waiver to make a mandatory general offer when the latter acquired the UIC shares from Haw Par, we note that the Wee Concert Party continues to buy small stakes from the market from time to time, inching its stake closer to 50%.”
Nevertheless, the analyst sees that gaining control over UIC at appropriate prices will bode well for UOL as it could unlock a larger portfolio of investment/development properties help by both UOL and UIC.
As at 10.20am, shares in UOL are trading 3 cents higher at $8.85 or 20.7 times FY17 earnings with a dividend yield of 1.7%.
Shares in UIC are trading 4 cents higher at $3.35.
