Latest Earnings From UOL Group Limited: Challenges Ahead

UOL Group Limited (SGX: U14) announced its second-quarter results for the financial year ending 31 December 2016 last evening.

As a quick background, UOL is a property company with a diversified portfolio of real estate assets across various sectors such as residential apartments, offices, retail malls, and hotels.

With that let’s dive into its latest financials to see how it performed.

The following’s a quick summary of some of the latest financial figures from UOL Group:

  1. Revenue for the quarter came in at S$363.5 million, up 6% from a year ago.
  2. But, profit attributable to shareholders tumbled by 55% year-on-year to $68.8 million. This was mostly due to fair value losses on UOL’s investment properties. If the fair value gains/losses were stripped away, UOL’s profit attributable to shareholders for the reporting quarter would have been S$90.3 million, down by ‘only’ 9% from a year ago.
  3. Consequently, earnings per share (EPS) saw a 54.6% decrease from 19.36 cents in the second-quarter of 2015 to 8.64 cents in the reporting quarter.
  4. UOL’s net asset value per share dropped by 0.7% from S$9.87 a year ago to S$9.84.
  5. Cash flow from operations came in at S$54.0 million with capital expenditure clocking in at S$195.0 million. This meant that UOL had negative free cash flow of S$141.0 million. In contrast, the company had reported a positive free cash flow of S$97.1 million in the preceding year (operating cash flow of S$110.5 million and capex of S$13.4 million).
  6. As of 30 June 2016, UOL’s cash and equivalents stood at S$272.1 million while borrowings came in at S$2.73 billion, putting the company in a net debt position to the tune of S$2.46 billion. This implies a net gearing (net debt over equity) of 29%. UOL’s balance sheet had strengthened compared to a year ago when it had a net gearing of 31%.

The breakdown of the revenue for the different segments can be seen below:

UOL segment table
Source: UOL’s earnings release

UOL’s revenue growth had come mainly from the property development segment. It enjoyed higher progressive revenue recognition from ongoing property development projects such as Riverbank @ Fernvale , Seventy Saint Patrick’s, Botanique at Bartley, and Principal Garden.

Regarding its outlook, this is what UOL has to say:

“With Britain’s decision to withdraw from the European Union, the global economic outlook remains uncertain.

In Singapore, demand for private residential properties remains lacklustre and will continue to be affected by the various cooling measures. Office rentals are under pressure given the looming supply coming on stream. Weak retail sales and competition from e-commerce will continue to impact retail rents. The hotel market in the Asia Pacific is expected to remain competitive given the uncertain macro-economic conditions.”

Share of UOL closed at S$5.84 last evening. At that price, the company has a price to book ratio of 0.6 based on its latest net asset value per share.

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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 any companies mentioned.