What Investors Should Know About UOL Group Limited


UOL Group Limited (SGX: U14) became a blue chip stock only recently in late September when it assumed a new role as one of the 30 constituents of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

Here’re some important things about UOL’s business that prospective and current investors may want to know.

A long and impressive history

UOL has a long history in Singapore’s stock market – founded in 1963, the company became a listed entity just one year later. 2015 actually marks UOL’s 51st anniversary as a listed company.

UOL’s in the business of real estate and it has three main operating segments:

  1. Property development: The development of residential real estate in Singapore and other foreign markets like China
  2. Property investment: Ownership of a portfolio of commercial and retail properties, as well as serviced residences
  3. Hotel operations: Ownership of hotels in countries like Singapore, Australia, China, and more

The firm’s total assets stand at S$11.76 billion (as of 30 June 2015) and it has a presence in 13 countries in total.  Through its wholly-owned subsidiary, Pan Pacific Hotels Group Limited, UOL manages and owns more than 30 hotels, resorts, and serviced apartments that are mostly under the Pan Pacific and PARKROYAL brands.

Over the past decade from 2005 to 2014, UOL has achieved a stellar track record of growth. Revenue has grown at a compound annual rate of 11.6% from S$505.5 million to S$1.36 billion while profit before fair value adjustments have stepped up at a rate of 14.8% per year from S$149.3 million to S$515.2 million.

That growth has benefited long-time investors of UOL: After accounting for reinvested dividends, UOL’s shares have delivered a total return of 241.5% since 1 October 2005. That would equate to a compound annual growth rate of 13%.

Building the future

But, UOL’s near-term future looks murky. For the first-half of 2015, the company has seen its revenue and profit before fair value adjustments drop year-on-year by 7% and 29% respectively. A large part of the declines have to do with the slowdown in the property development market in Singapore.

If Singapore’s residential real estate market can’t thaw from its cooled state at the moment, UOL’s sales growth may be lackluster in the near-future at the very least.

A peek at value

It’d appear that the market’s apprehensive as well about UOL’s future. At UOL’s current share price of S$6.04, it’s priced at just 0.6 times its latest tangible book value. While its dividend yield of 2.5% is not exactly eye-catching, it’s also carrying a price-to-earnings ratio of just 8.

For more investing insights and analyses, you can sign up for The Motley Fool's free weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any company mentioned.