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4 Times Cheaper Than Its Peers — UOL Poised For A Bull?
Tradeable, Tradeable Ideas | 14 April 2014
Related stocks:
U14
By: Lim Si Jie
Articles (169) Profile
  1. UOL’s developments in emerging markets reassures investors of its continuing search for more revenue
  2. Consistent dividend payout and sound fundamentals is a sign of bargain for UOL.
  3. The recent inclusion into S&P Asia Property 40 Index as a constituent stock is a huge confidence boost for investors.

Company Profile & Business Model

UOL is one of Singapore’s established property companies with a portfolio of investment and development properties. UOL is embarking on an exciting phase of expansion to create a portfolio in high-growth regions through direct investment or strategic collaborations with overseas partners.

The Group’s diversified portfolio comprises of residential apartments, offices, retail malls, hotels, spas, and restaurants.

The Group owns 19 hotels and serviced suites in Singapore, Australia, The People’s Republic of China, Vietnam, Malaysia, and Myanmar. Out of these, 12 are managed under the PARKROYAL brand and five are managed under the Pan Pacific brand. In addition, the Group manages 12 hotels under the Pan Pacific brand for third party owners.

Corporate Development

There were two major announcements in March 2014 for UOL.

Firstly, its subsidiary, Suasana Simfoni Sdn. Bhd. announced that it had completed the sale of land in Malaysia to Damai City on 25 March 2014 for a total cash consideration of RM568 million. Upon completion of the sale, a pre-tax gain of approximately RM247 million ($95 million) will be recognized from the sale. UOL’s share of the gain will be RM148 million ($57 million).

Secondly, UOL announced a dividend of $0.20 per share, subjected to approval at the Annual General Meeting (AGM) to be held on 22nd April 2014. UOL has been consistently giving out dividends in its past five financial years. To me, being able to consistently declare dividends is a sign of management’s prudence and capability.

Reading into UOL’s Annual Report

UOL released its annual report for financial year 2013 in February 2014. Key points that were highlighted in the financial statement include:

  • Pan Pacific Hotel Group entered into a joint venture agreement to acquire, construct, develop and manage the first Pan Pacific hotel (the 348-room Pan Pacific Yangon) located in Yangon, Myanmar. Strong revenue growth shown by PARKROYAL Yangon (another hotel owned by UOL) is a sign for me that Pan Pacific is poised to ride on the growing demand in Myanmar, from both tourists and business travellers, in the future.
  • UOL was added to the S&P Asia Property 40 Index as a constituent stock. In my opinion, to be considered for a benchmark index is an indication that UOL is one of the top developers in Asia. This is a boost of confidence for investors as well as positive publicity for UOL.

UOL’s Fundamentals Analysis

UOL’s P/E, P/CF and P/B are all less than the industry benchmark. If you noticed, UOL’s P/S stood out even more with industry P/S at 841 while UOL is only at 4.51. The relatively lower P/S ratio means that investors are paying much less for every dollar of revenue that UOL is currently generating.

Coupled with the high operating and net profit margins, the low P/S ratio becomes even more significant because a high percentage of revenue is retained as income for UOL. UOL’s various price ratio clearly signals to investors that UOL is currently undervalued.

UOL’s board of directors is led by chairman emeritus of United Overseas Bank (UOB). In addition, there are statistics to back up UOL’s management efficiency. UOL has an above industry average ROA, ROE and ROI for a timeframe of five years. UOL’s management is indeed reassuring for investors, in terms of both statistics and reputation.

Technical Analysis

 

UOL’s share price has been free falling since July 2013. It reached a bottom of $5.61 at the beginning of February and has since rebounded on an uptrend.

ADX value hit 30.2 on 8th April 2014 with its D+ hitting a higher value than its D-. This signals that UOL is on an upward trend in terms of its share price.

Moreover, UOL’s 20-EMA recently crossed over its 50-EMA to support the signal from ADX that UOL will continue to ride on its uptrend. There might be a period of consolidation between $6.26 and $6.10. Investors may want to consider entering after the consolidation and breaking of the $6.26 resistance level.

#Bullish

After taking a close look at UOL’s annual report, I am taking a bullish view on the long term prospects of UOL which is further substantiated by chart movements on UOL’s share prices.

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Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

UOL Group  7.510 -0.05 -0.66%   
Business: Co engages in property development, property investments, and hotel businesses. [FY17 Turnover] Ppty devt (52.2%), hotel ops (23.6%), ppty invs (14.9%), invs & others (9.3%).

Insight: Aug-18, 1H18 revenue jumped 72.9% to $1.3b attribu... Read More


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