UOL Limited From The Perspective of A Value Investor

UOL Limited (SGX: U14) is a Singapore-listed property company. The group has a diversified portfolio of assets spanning residential apartments, offices, retail malls and hotels.

Apart from owning and managing its own hotel properties, it also provides hotel management services. This is under its “Pan Pacific” and “ParkRoyal” banners.

The company currently has a market capitalization of S$4.79 billion, and is one of the 30 stocks on the Straits Times Index (SGX: ^STI).

Value investors like to look at four key ratios, namely, Price-to-Earnings (P/E) ratio, Price-to-Book (P/B) ratio, Leverage ratio and Dividend yield.

UOL group is currently trading at a price of S$6.02. Its earning per share (EPS) at end December 2015 stood at S$0.49. This would imply a P/E ratio of 12.28. This is higher than the P/E ratio of the SPDR STI ETF (SGX: ES3) – an Exchange-Traded Fund that tracks the Straits Times Index – which stands at 11.53.

The company has a Net Tangible Asset value (NTAV) of S$9.89. This would imply a P/B ratio of 0.60. What this means is that the market is valuing the assets the company at a 40% discount.

At end December 2015, the company had debt of S$2.5 billion and equity of S$7.89 billion. This means the company has a leverage ratio of 34%. This could be a little on the high side.

Lastly, the company paid out a dividend of S$0.15 for the full year 2015. It has paid out that amount or more in the last four years. Assuming the company pays out a similar dividend in 2016, this would mean a yield of 2.5%, which seems fairly decent.

From the four metrics above it looks like UOL is a “maybe” for value investors. But it could serve as a good starting point for investors to dig deeper into the company’s financials.

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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 Esjay does not own shares in UOL Limited.