Is UOL gathering enough growth steam?

DBS thinks so with the developer's full plate of condo and hotel launches this year.

With gestating projects like The Lion City site and an Upper Pickering hotel finally becoming operational, earnings from rental income and hotel contributions should pick up, according to the brokerage firm.

Here's more from DBS:

Results in line with estimates. UOL reported a 12% decline in net profit for FY11 to $664.2m, largely due to lower revaluation gains y-o-y. At the operating level, results were boosted by higher property development revenue, improvement in rental income and hotel contributions, as well as higher dividend income.

The group TOP-ed 4 projects in FY11 – Duchess Residences, Breeze by the East, Nassim Residences and Panorama in FY11 while its investment properties are still enjoying positive reversions. Meanwhile, its hotels enjoyed an 8% boost in Revpar, largely coming from its Singapore and SEA hotels. The group proposed a 15cts DPS, translating to a 3% yield.

More launches planned. Looking ahead, earnings visibility will be supported by the planned launch of the Lion City site as well as continued sales from Archipelago (16% sold currently, $980psf) as well as launch of The Esplanade in Tianjin. The Lion City development is expected to comprise 244 condos and 19,519sm of retail space. The project is expected to be launched in 2Q12 and is planned to have a child-based theme similar to United Square.

Meanwhile, within its hotel operations, 4 new hotels and serviced suites are expected to become operational in FY12, including Upper Pickering. As the portfolio gathers operating momentum, we anticipate earnings to benefit from greater operating activity and brand visibility.

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