UOL Group Limited ’s Latest Earnings: What Investors Should Know

UOL Group Limited (SGX: U14) reported its earnings for the year ended 31 December 2015 last Friday.

As a brief background for some context later, the company hosts a number of businesses, with much of it related to real estate. The bulk of its revenue comes from three core businesses, namely, Property Development, Property Investments, and Hotel Operations.

You can learn more about the sprawling United Overseas empire in here and how UOL Group fits into the overall picture. You can also catch up with the results from UOL Group’s previous quarter here.

Financial highlights

The following’s a quick summary on the latest financial figures from UIC:

  1. For 2015, UOL Group’s revenue was down 6% from a year ago to $1.28 billion.
  2. But, net profit plunged by 43% to $413 million over the same period. Much of the fall can be traced to the lower gain in fair value of the company’s investment properties that was recorded in 2015. In contrast, the profit before fair value gains on investment properties and income tax expense was down by a milder 20% to $411 million.
  3. UOL Group’s diluted earnings per share (EPS) was also down 44% from 87.92 cents in 2014 to 49.35 cents in 2015.
  4. Meanwhile, the company’s net asset value had inched up by 2.1% from $9.68 per share in 2014 to $9.89 per share in 2015.
  5. Cash flow from operations came in at $517 million for 2015. With capital expenditure at $47.2 million, UOL Group had positive free cash flow of $470 million. This is an improvement from the previous year when there was negative free cash flow.
  6. As of 31 December 2015, UOL Group had $273 million in cash and equivalents and borrowings of $2.6 billion. This is also an improvement from where its balance sheet was a year ago with $287 million in cash and equivalents and borrowings of over $3 billion.

Additionally, the board of directors had proposed a first and final dividend of $0.15 per share for 2015, unchanged from a year ago.

Operational highlights

For 2015, the Property Development segment recorded sales of $577 million, down 14.6% from the $676 million recorded in 2014. Notably, the prior year included a one-time sale of the Jalan Conlay land in Malaysia that’s worth $220.1 million.

Elsewhere, Hotel Operations also registered weaker sales of $419 million for 2015. This is a 4.3% decline from the $438 million in revenue the segment had made in 2014. Management cited refurbishment works at Pan Pacific Perth and PARKROYAL Yangon as well as currency headwinds in Malaysia and Australia as reasons for the fall.

The Property Investments segment bucked the trend with a 10.6% top-line gain from $198 million in 2014 to $219 million in 2015. This was due to the addition of the OneKM mall which opened in the last quarter of 2014.

Liam Wee Sin, UOL Group’s Deputy Group Chief Executive Officer, added the following short commentary in the earnings release on the company’s performance in 2015 and the outlook ahead:

“Singapore residential market remained challenging in 2015 amid an economic slowdown and the dampening effects of the government’s cooling measures. Despite this, our property development and investment business performed creditably. We sold over $900 million worth of new apartments in Singapore.”

We expect market conditions to remain subdued in 2016 and will continue to build recurrent income from rentals of offices and shopping malls, and from our hospitality business.”

Foolish summary

As of its closing price last Friday of $5.69, UOL Group traded at a price-to-book ratio of less than 0.6 times, and has a trailing dividend yield of 2.6%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.