UOL Group U14 has reported earnings of $135 million for the 1HFY2023 ended June, 64% lower than the earnings of $371.0 million in the corresponding period the year before.
The reduced earnings were attributed mainly to the 98% drop in attributable fair value gains on investment properties. During the period, UOL reported attributable fair value gains on its investment properties of $3.5 million against $190 million for the same period last year.
Revenue for the 1HFY2023 fell by 11% y-o-y to $1.37 billion as the decline in the revenue from the group’s property development offset the growth in revenue from its hotel operations.
Revenue from UOL’s property development fell by 32% y-o-y to $676.3 million mainly due to lower contributions from Avenue South Residence, The Tre Ver, Park Eleven Shanghai and partly offset by higher progressive revenue recognition from AMO Residence and The Watergardens at Canberra.
Revenue from its hotel operations grew by 66% y-o-y to $341.5 million as almost all of the group’s hotels benefitted from the return of travel. The group’s hotels in Singapore, especially, saw the largest y-o-y increases. This was followed by Parkroyal Collection Kuala Lumpur which opened in June 2022, Pan Pacific London and Parkroyal Darling Harbour in Sydney. Its occupancy for its hotels in Singapore, Oceania and others, stood at 66%, 68% and 59% respectively. UOL’s “others” under its hotels segment refers to its properties in China, Vietnam, Malaysia, Myanmar and the UK. It does not include its hotel in Kuala Lumpur which opened on Dec 1, 2022.
Revenue per available room (RevPAR) for its hotels in Singapore, Oceania and others stood at $212, $147 and $89, up from $140, $109 and $51 respectively.
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During the 1HFY2023, UOL’s gross profit dipped by 1% y-o-y to $503.2 million while gross profit margin stood at 37%, four percentage points higher y-o-y. The higher gross profit margin was due to higher investment income and improved performance of the hotel operations.
In this period, the group recorded a total share of loss of associated and joint venture (JV) companies of $3.4 million compared to the total share of profit $15.8 million in the year before. This was due mainly to lower contributions from Meyer House in Singapore which was completely sold, and Mandarin Oriental Singapore which was closed for renovations in March 2023.
As at June 30, the group’s committed occupancy for its Singapore office portfolio stood at 90.0% while occupancy rates for its UK office portfolio came in at 84.5%. Its Australian office portfolio was at 100.0% for the period. UOL’s committed occupancy for its retail portfolio stood at 99.1% as at June 30.
As at the same period, cash and cash equivalents stood at $1.65 billion.
No interim dividend was declared.
“We have been proactively engaged in asset management and asset enhancement initiatives of our existing commercial portfolio while looking for acquisition opportunities. For hospitality, we recently opened Pan Pacific Orchard, entered into a sale and purchase agreement for Parkroyal on Kitchener Road, and continue to review our hotel portfolio with the view of unlocking value at an opportune time,” says UOL’s group chief executive Liam Wee Sin.
Looking ahead, UOL says it expects its growth to be dampened by the property cooling measures, macroeconomic headwinds and a higher supply of new homes in the next 12 months.
“Our 50% stake in the recent acquisition of a mixed retail cum residential site in Tampines replenishes our pipeline of residential units in the outside central region. With a five-hectare site area accommodating about 1,190 residential units, this will be one of the largest integrated developments with transport hub and direct MRT connectivity,” adds Liam.
At the same time, the group sees office leasing sentiment in Singapore turning cautious due to the lower projected economic growth. The retail and hospitality sectors remain the only bright spots with the recovery of visitor arrivals. Retail rents are expected to remain supported by the low pipeline supply of spaces while the hospitality sector is likely to benefit the group’s hotels thanks to a continued pick-up in leisure and corporate travel.
Shares in UOL closed 2 cents higher or 0.29% up at $6.94 on Aug 10.
