UOL Surprises With 14% Profit Gain

Source : The Straits Times, Nov 6, 2008

PROPERTY group UOL defied the gloom by posting surprisingly good third-quarter results yesterday, thanks to higher revenue from new launches.

Net profit for the third quarter rose 14 per cent to $73.5 million while revenue jumped 61 per cent to $267.9 million.

The launches of Panorama in Kuala Lumpur and Breeze by the East here earlier this year and Duchess Residences last year were the key drivers of the robust result.

They helped lift revenue from the property development segment by 229 per cent to $136.9 million - more than half of total revenue for the three months to Sept 30.

Revenue from property investments also improved 27 per cent. This was due largely to higher average rental rates at retail and office spaces in Novena Square, United Square and Odeon Towers, and the opening of the Pan Pacific Serviced Suites in April.

The share of profit of associated companies also gained 84 per cent to $15.1million for the quarter with the launches of One North Residences and Nassim Park Residences.

Earnings per share rose from 8.11 cents to 9.24 cents, while net asset value per share was $4.84 as at Sept 30, down from $4.96 as at Dec 31 last year.

For the nine months, revenue increased 24 per cent to $638.9 million but net profit fell 39 per cent to $261.4 million.

UOL's listed subsidiary Hotel Plaza posted a modest 2 per cent revenue rise for the third quarter to $77.7 million as gains from the group's Singapore hotels were offset by weaker performance from hotels in Malaysia and China.

Net profit for the quarter fell 4 per cent to $13.5 million. For the nine months, revenue rose 11 per cent to $243.3 million and net profit advanced 10 per cent to $44.3 million.

Despite UOL's surprising results, the global financial crisis and a weakening external environment will likely affect the property market.

UOL said that with the tightening of credit and a weak stock market, buyer sentiment in the residential property market here would be hit.

With firms looking to scale down their activities, demand for office space will also be affected and rental rates are likely to weaken.

The slowing global economy will also hit the hotel industry here and across the Asia-Pacific region as business and leisure travellers cut down on trips.

Hotel Plaza expects its hotel revenue to decline.