UOL Group U14 has reported earnings of $120.8 million for the 2HFY2022 ended Dec 31, 2022, 44% lower than the earnings of $216.1 million for the corresponding period the year before.
The lower half-year earnings were due to the higher finance costs, other losses compared to gains from the year before, as well as fair value losses on the group’s investment properties from the gains in the year before.
For the FY2022, the group’s earnings improved by 60% y-o-y to $491.9 million. Though finance costs rose as well due to interest rate hikes and new loans including those used to acquire the Watten Estate and Pine Grove sites, the group also saw a share of profit from its associated companies compared to a loss in the FY2021. The surge in share of profit of a joint venture company (JVCo) and fair value gains also contributed to the y-o-y growth in the group’s full year earnings.
During the 2HFY2022, revenue increased by 21% y-o-y to $1.67 billion. FY2022 revenue increased by 28% y-o-y to $3.20 billion. The revenue growth was attributable to higher revenue from the group’s property development and hotel operations. Development projects in Singapore and China accounted for slightly over half of the total revenue for the FY2022.
Revenue from property development rose during the 2HFY2022 and FY2022 due mainly to higher progressive recognition of revenue from Clavon, The Watergardens at Canberra and AMO Residence. The higher number of units handed over for Park Eleven, Shanghai, also contributed to the revenue growth.
Revenue from hotel operations also grew during the 2HFY2022 and FY2022 due mainly to the opening of new or refurbished hotels. This includes the Parkroyal Collection Marina Bay in May 2021, Pan Pacific London in September 2021 and Parkroyal Collection Kuala Lumpur in June 2022. The segment also benefitted from the reopening of borders and the resumption of economic and social activities in the segments’ respective countries.
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2HFY2022 gross profit increased by 32% y-o-y to $564.7 million while gross profit for the FY2022 increased by 33% y-o-y to $1.07 billion. Gross profit margin (GPM) for the 2HFY2022 increased by three percentage points to 34% while GPM for the FY2022 increased by one percentage point to 33%.
Finance costs surged by 104% y-o-y to $81.7 million during the 2HFY2022 while finance costs rose by 90% y-o-y to $128.3 million during the FY2022. This was due mainly to the rising interest rate environment.
In the 2HFY2022, the group registered other losses of $5.1 million from the other gains of $26.7 million in the 2HFY2021. FY2022 other losses came to $5.1 million, down from other gains of $26.7 million in the FY2021.
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During the 2HFY2022, the group also saw fair value losses of $48.9 million on its investment properties compared to the other gains of $129.4 million in the 2HFY2021. On the other hand, the group registered fair value gains of $268.2 million for the FY2022, 135% higher y-o-y.
Share of profit of associated companies stood at $3.0 million during the 2HFY2022, up from the share of loss of $2.6 million. During the FY2022, share of profit came to $1.1 million, up from the $9.6 million share of loss in the FY2021.
Share of profit of a JVCo fell by 84% y-o-y to $601,000 in the 2HFY2022. However, this came to $18.3 million during the FY2022, 205% higher y-o-y.
The higher share of profit from associated and JV companies in the FY2022 was due to higher contribution from Meyer House and better performance by Mandarin Oriental Singapore.
As at Dec 31, 2022, cash and cash equivalents stood at $1.46 billion.
Earnings per share (EPS) for the 2HFY2022 and FY2022 stood at 14.31 cents and 58.23 cents respectively.
A first and final dividend of 15 cents per share has been declared, along with a special dividend of 3 cents per share. This brings the group’s total dividend for the FY2022 to 18 cents per share, up from 15 cents per share in the FY2021.
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“We are pleased with the strong set of results for the full year on the back of healthy sales of our residential projects and the rebound in the hospitality business,” says Liam Wee Sin, CEO of UOL Group.
“Going forward, we are mindful of the external uncertainties given the ongoing geopolitical tensions, persistent inflationary pressures, recession risks in some developed economies and rising business costs,” Liam adds.
Looking ahead, the group says it expects the residential property market in Singapore to remain “healthy” although the higher property prices will be moderated by a projected higher supply in new homes in 2023. The higher Buyers’ Stamp Duty (BSD), which was introduced during the Budget 2023, is also likely to have a “marginal impact” on “end-sale home demand”.
Office rents in the central region of Singapore are also expected to grow at a slower pace in 2023. That said, the group believes that rental prices should continue to stay supported by the tight future supply and might be further mitigated by the reduction of inventory due to potential redevelopment in the central business district.
“We believe UOL’s residential inventory which has strong locational attributes will continue to draw keen interest from homebuyers and investors. Our land replenishment includes two freehold land parcels which are rare and sought-after,” says Liam.
On rentals, Liam adds that the group is pursuing more asset enhancement initiative (AEI) projects to “strengthen our office portfolio”.
“[This will allow us] to be better positioned to cater to tenants who are seeking more flexible space, living room concepts and sustainable features.”
In addition, the group’s hospitality business could continue to “trend upwards” amid the return of tourists.
Shares in UOL Group closed 3 cents lower or 0.44% down at $6.76 on Feb 27.
