Although UOL announced a special dividend of 5 cents along with its first and final dividend of 15 cents, the payout ratio was 24%. “We are approaching things with a bit more caution and adopting more prudent principles. After attending our 1HFY2023 results, some of you concluded that it might be in the best interests of UOL to apply some of the gains, if not the bulk of proceeds from Kitchener, to pare down our loans. [Our cost of debt of] 3.6% to 3.7% is relatively expensive compared to some of the asset yields we can potentially obtain in acquisitions in some parts of the world,” says Kwa Bing Seng, the outgoing CFO.
The Singapore-listed developers share a common thread of experiencing valuation declines in foreign markets. Still, UOL Group appears to be the least affected. With its $22.2 billion asset size, 86% is in Singapore, 3% is in Australia, 1% is in Malaysia, and 5% is in China and the UK.
UOL’s financials are likely to be among the most robust. In FY2023 ended December 2023, operating profit before fair value gains and losses fell by 24% y-o-y to $475.1 million. Fair value gains of $20.2 million on investment properties were significantly lower than FY2022’s $268.2 million, as gains in Singapore were offset by losses in the UK and Australia. The sale of ParkRoyal Kitchener netted UOL $442.3 million, which added to net profit.
