CGS International
August 13, 2025
UOL Group Delivers Strong 1H25 Performance: Robust Residential Sales, Rising Rental Income, and Focused Portfolio Optimization Drive Growth
1H25 Earnings Beat: Powered by Residential Momentum
- UOL Group reported 1H25 earnings per share (EPS) of 24.33 Singapore cents, reaching 61.1% of the FY25 forecast, signaling a strong outperformance.
- Revenue jumped 22% year-on-year to S\$1.55 billion, driven by higher contributions from all business segments except hotels.
- Profit after tax and minority interest (PATMI) surged 58% year-on-year to S\$205.5 million, underpinned by operational excellence, reduced interest expenses, and gains from the divestment of Parkroyal Yangon.
- Net debt-to-equity ratio improved further to 0.25x by end-1H25, reflecting robust capital management.
Residential Development: Accelerated Launches and Impressive Sell-Through Rates
- Residential development revenue soared 40% year-on-year to S\$731.7 million, with EBIT up 38%.
- Strong billing recognition from major projects:
- Pinetree Hill (88% sold)
- Watten House (95% sold)
- MEYER BLUE (69% sold)
- Newly launched PARKTOWN Residence and UPPERHOUSE at Orchard Boulevard achieved sales rates of 92% and 64%, respectively.
- Upcoming launch: Skye at Holland, a 666-unit project, scheduled for September 2025, is expected to further enhance development income visibility.
Rental Income: Boosted by Asset Enhancements and Positive Reversions
- Office portfolio occupancy increased to 96.6% by end-1H25.
- Retail portfolio occupancy saw a slight dip to 97.3%.
- Rental revenue rose 11.9% year-on-year, supported by:
- Completion of Singland Tower’s asset enhancement in December 2024
- Contributions from 388 George St, Sydney
- Strong positive rental reversions: +9.9% for offices, +11.4% for retail
- Hotel portfolio performance improved with higher occupancy, although Singapore’s RevPAR declined marginally year-on-year.
- Divestment: Parkroyal Yangon was sold at a 30% premium to its latest valuation, aligning with UOL’s ongoing portfolio optimization strategy.
Strategic Portfolio Management and Future Plans
- Management remains committed to evaluating and optimizing the property portfolio, focusing on value creation through ongoing reconstitution.
- Potential catalysts for further re-rating include unlocking value from investment properties and hotels, and quicker sell-through of residential projects.
- Key downside risks: cost overruns from asset enhancements and rising construction costs, which could compress development margins.
Valuation, Target Price, and Shareholder Structure
- Recommendation: Add (unchanged)
- Target price: S\$8.20 (representing a 40% discount to RNAV)
- Current price: S\$7.05 (16.2% upside)
- Market cap: S\$5,956 million (US\$4,635 million)
- Average daily turnover: S\$11.53 million (US\$8.98 million)
- Shares outstanding: 844.9 million
- Free float: 54.0%
- Major shareholders:
- Wee related vehicles (including Haw Par): 31.2%
- United Overseas Bank: 9.8%
- Schroders: 5.0%
Financial Highlights: Key Figures and Ratios
| Year |
2023A |
2024A |
2025F |
2026F |
2027F |
| Total Net Revenues (S\$m) |
2,682 |
2,795 |
2,550 |
2,553 |
2,626 |
| Operating EBITDA (S\$m) |
681.9 |
784.7 |
807.9 |
804.5 |
687.3 |
| Net Profit (S\$m) |
707.7 |
358.2 |
336.7 |
374.2 |
400.5 |
| Core EPS (S\$) |
0.33 |
0.34 |
0.40 |
0.44 |
0.47 |
| Core EPS Growth |
(19.7%) |
3.3% |
17.4% |
11.1% |
7.0% |
| FD Core P/E (x) |
21.46 |
20.77 |
17.69 |
15.92 |
14.87 |
| DPS (S\$) |
0.20 |
0.18 |
0.18 |
0.18 |
0.18 |
| Dividend Yield |
2.84% |
2.55% |
2.55% |
2.55% |
2.55% |
| EV/EBITDA (x) |
20.73 |
18.32 |
17.25 |
17.20 |
20.20 |
| Net Gearing |
21.7% |
21.7% |
18.2% |
16.8% |
16.1% |
| P/BV (x) |
0.54 |
0.52 |
0.51 |
0.50 |
0.49 |
| ROE |
2.56% |
2.54% |
2.90% |
3.16% |
3.32% |
RNAV Breakdown: Key Property and Hotel Assets
UOL’s RNAV is anchored by a diversified portfolio of commercial, retail, and hospitality assets across Singapore and international markets. Major contributors include:
- Odeon Towers: S\$502 million (100%, 3.5% cap rate)
- United Square (Office): S\$717 million (100%, 3.8% cap rate)
- United Square (Retail): S\$548 million (100%, 4.4% cap rate)
- Novena Square (Office & Retail): S\$693 million (60%, 3.8% cap rate) and S\$319 million (60%, 4.4% cap rate)
- International hotels: Pan Pacific, PARKROYAL, and others, with valuations ranging from S\$24 million to S\$373 million per asset.
- Equity/strategic holdings: United Overseas Bank (UOB) and United Industrial Corporation (UIC).
- Total RNAV: S\$11,527 million (S\$13.66 per share)
- Target price: S\$8.20 (implying a 40% discount to RNAV)
Singapore Developers Peer Comparison
| Company |
Price (lc) |
Tgt Px (lc) |
Mkt Cap (US\$m) |
FY24A Core P/E (x) |
FY25F Core P/E (x) |
FY26F Core P/E (x) |
FY25F RNAV (S\$) |
Disc. to RNAV (%) |
P/BV (x) FY24A |
P/BV (x) FY25F |
Div. Yield FY24A |
Div. Yield FY25F |
| APAC Realty Ltd |
0.71 |
0.81 |
195 |
26.3 |
13.3 |
11.2 |
n.a. |
n.a. |
1.59 |
1.47 |
3.0% |
5.3% |
| Capitaland Investment |
2.75 |
4.30 |
10,675 |
28.9 |
16.8 |
15.6 |
4.78 |
-42% |
1.01 |
0.96 |
4.4% |
4.4% |
| City Developments |
6.35 |
8.97 |
4,415 |
28.4 |
7.4 |
20.5 |
16.32 |
-61% |
0.63 |
0.62 |
1.6% |
1.9% |
| Frasers Property Limited |
0.95 |
1.41 |
2,887 |
10.7 |
18.8 |
18.7 |
2.57 |
-63% |
0.37 |
0.36 |
4.8% |
4.8% |
| Hongkong Land Holdings Ltd |
6.18 |
4.91 |
13,471 |
33.3 |
20.2 |
19.6 |
n.a. |
n.a. |
0.46 |
0.44 |
3.7% |
3.9% |
| Propnex Ltd |
1.64 |
1.77 |
945 |
29.7 |
15.4 |
14.3 |
n.a. |
n.a. |
9.83 |
8.36 |
4.7% |
6.2% |
| UOL Group |
7.05 |
8.20 |
4,635 |
20.8 |
17.7 |
15.9 |
13.66 |
-48% |
0.52 |
0.51 |
2.6% |
2.6% |
| Singapore average |
|
25.6 |
15.6 |
17.6 |
-33% |
0.58 |
0.56 |
3.6% |
3.7% |
ESG: Sustainability Leadership and Targets
- UOL received a “B” ESG Combined Score for FY23 from LSEG, with strong Environmental and Social scores (B+) and a Governance score of B-.
- Rated A+ for ESG Controversies, and upgraded to AA in 2023 by MSCI, placing UOL among industry leaders in real estate development and diversified activities.
- All Singapore hospitality properties are Global Sustainable Tourism Council (GSTC)-certified, with the Pan Pacific Hotels Group leading in certified rooms and properties.
- Key sustainability targets:
- Reduce combined Scopes 1 and 2 GHG emissions by ~46% by 2030 (from 2019 baseline).
- Lower energy consumption intensity by 0.9% and water consumption intensity by 2% by 2030 for commercial and hospitality properties.
- FY23 highlights:
- Solar panels installed at five Singapore properties with 1MWp capacity.
- 20% reduction in Scopes 1 and 2 GHG emissions for commercial and hospitality properties (vs. 2019 baseline).
- 7.6% reduction in energy consumption group-wide.
- 45% increase in average employee training hours to 48 hours per person.
- All main contractors for development projects are ISO 45001 certified.
No premium or discount is currently applied to UOL’s valuations for ESG achievements, but future improvements in ESG scores could enhance operational efficiencies and financial performance.
Comprehensive Financials: Profit, Cash Flow, and Balance Sheet
Profit & Loss Highlights (S\$ million)
|
2023A |
2024A |
2025F |
2026F |
2027F |
| Total Net Revenues |
2,682 |
2,795 |
2,550 |
2,553 |
2,626 |
| Gross Profit |
682 |
785 |
808 |
805 |
687 |
| Operating EBITDA |
682 |
785 |
808 |
805 |
687 |
| Operating EBIT |
554 |
653 |
671 |
668 |
687 |
| Pretax Income (pre-EI) |
475 |
534 |
602 |
658 |
694 |
| Net Profit |
708 |
358 |
337 |
374 |
400 |
| Recurring Net Profit |
278 |
287 |
337 |
374 |
400 |
Cash Flow Highlights (S\$ million)
|
2023A |
2024A |
2025F |
2026F |
2027F |
| EBITDA |
682 |
785 |
808 |
805 |
687 |
| Cash Flow From Operations |
1,105 |
724 |
672 |
674 |
555 |
| Free Cashflow to Firm |
1,198 |
609 |
673 |
678 |
562 |
| Free Cashflow to Equity |
913 |
745 |
554 |
557 |
439 |
Balance Sheet Highlights (S\$ million)
|
2023A |
2024A |
2025F |
2026F |
2027F |
| Total Cash and Equivalents |
1,390 |
1,510 |
1,793 |
2,077 |
2,240 |
| Total Current Assets |
5,049 |
4,954 |
5,203 |
5,512 |
5,718 |
| Total Non-current Assets |
17,150 |
17,883 |
17,809 |
17,909 |
18,202 |
| Total Liabilities |
6,399 |
6,436 |
6,350 |
6,443 |
6,589 |
| Shareholders’ Equity |
11,042 |
11,535 |
11,719 |
11,942 |
12,190 |
| Total Equity |
15,800 |
16,400 |
16,662 |
16,978 |
17,331 |
Key Ratios and Operating Metrics
- Revenue Growth (2025F): (8.8%)
- Operating EBITDA Margin (2025F): 31.7%
- Net Cash Per Share (2025F): (S\$3.60)
- Book Value Per Share (2025F): S\$13.87
- Gross Interest Cover (2025F): 5.64x
- Effective Tax Rate (2025F): 15.4%
- Net Dividend Payout Ratio (2025F): 45.2%
- ROIC (2025F): 10.1%
- ROE (2025F): 2.90%
- Property Development Revenue (2025F): S\$988.2 million
- Property Investment Revenue (2025F): S\$526.7 million
- Hotel Ownership and Operations Revenue (2025F): S\$818.0 million
- Management Services and Others Revenue (2025F): S\$217.3 million
Conclusion: UOL Group Positioned for Further Growth
UOL Group’s 1H25 performance underscores its market leadership, driven by robust residential sales, strong rental income, and effective portfolio management. With a diversified business model, high recurring income, and a solid balance sheet, UOL is well-positioned for future growth. Investors can look forward to continued value creation as management drives project sell-through and unlocks value from investment properties and hotels, all while maintaining a disciplined focus on sustainability and operational efficiency.
