It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.
On that note, let’s check out what business UOL Group Limited (SGX: U14) is involved in and how it generates its revenue.
With a track record of more than 50 years, UOL is a property company with an extensive portfolio of development and investment properties, hotels and serviced suites. The portfolio also includes properties held under United Industrial Corporation Ltd (SGX: U06), UOL’s listed subsidiary.
Let’s take a look at the table below for the revenue contribution of each business segment for the financial year ended 31 December 2017 (FY2017):Source: UOL Annual Report FY2017
The bulk of the revenue for UOL in FY2017 came from property development, which contributed to around 56% of total revenue. This segment is involved in the development of properties for sale. For the year, UOL sold 1,090 residential units with a total value of more than $1.5 billion based on bookings.
The hotel operations segment is involved in the operation of owned hotels. UOL, through its hotel subsidiary Pan Pacific Hotels Group Limited (PPHG), owns two acclaimed brands, namely, Pan Pacific and PARKROYAL. PPHG now owns and/or manages more than 30 hotels in Asia, Oceania and North America. Pan Pacific’s portfolio comprises 20 hotels and resorts including those under development while PARKROYAL’s portfolio has 13 hotels and resorts including those under construction.
UOL is also involved in the leasing of commercial properties and serviced suites under the property investments segment. Some of the assets under this segment include Novena Square, Clifford Centre and United Square. Furthermore, it owns four serviced suites properties in Singapore and Malaysia, and two commercial properties in London.
The investments segment takes care of investment in quoted and unquoted available-for-sale financial assets. These assets relate to equity shares traded in Singapore and China.
Last but not the least, the management services & technologies segment provides hotel management services under the Pan Pacific and PARKROYAL brands, project management, and the distribution of computers.
The following shows the revenue breakdown in terms of geography:Source: UOL Annual Report FY2017
In FY2017, Singapore contributed to the bulk of total revenue at 85.1%, followed by Australia at 6.9% and China at 2.7%.
Now that we know the basics of UOL’s revenue streams, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash-generating abilities and so on before deciding to invest in it.
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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 Sudhan P doesn’t own shares in any companies mentioned.