OUE’s profit up 20.3% to S$20.1m

Revenue growth of 39.8%, boosted by contributions from its hospitality business and its commercial properties, DBS Building Towers One and Two and OUE Bayfront.

Building on its growth momentum, SGX Mainboard-listed integrated property developer Overseas Union Enterprise Limited (“OUE” or the “Group”) on Wednesday reported another set of robust financial results for its second quarter (“2Q2011”) and first half (“1H2011”) ended 30 June 2011.

Profit after tax for 2Q2011 jumped 20.3% year-on-year to S$20.1 million, against a revenue of S$72.3 million which increased by 39.8%, according to an OUE report.

The strong second quarter lifted the Group’s 1H2011 profit after tax to S$247.6 million, a 23.0% rise from S$201.3 million a year ago. Revenue for the first half of the year surged 40.9% to S$140.5 million.

“We are reaping the rewards of our well-diversified portfolio of prime assets with a strong recurring income base. Higher revenues from our Hospitality and Property Investment divisions underpinned the continued strength of our financial performance. We are enjoying the contributions from DBS Building Towers One and Two acquired in September last year as well as rental income from our newly completed OUE Bayfront,” announced OUE’s Executive Chairman, Dr Stephen Riady.

In 2Q2011, revenue from the Group’s Property Investment division amounted to S$25.6 million compared to S$8.1 million a year ago, while the Hospitality division achieved revenue of S$44.6 million versus S$41.6 million last year.
In tandem with the healthy top-line growth, the Group’s gross profit increased by 48.9% to reach S$45.3 million in 2Q2011. On a half-year basis, gross profit hit S$86.8 million, up 52.6% from S$56.9 million in 1H2010.

The Group’s total assets continued to grow to S$5.3 billion as at 30 June 2011, from S$4.7 billion as at 31 December 2010. Net asset value per ordinary share as at 30 June 2011 was S$3.09, higher than S$2.86 as at 31 December 2010.

In view of its performance and to reward its shareholders, the directors of OUE have announced an interim tax-exempt dividend of 2 Singapore cents per share.

Riding on Singapore’s Tourism Growth
Based on GDP forecast by the Ministry of Trade and Industry, the Singapore economy is expected to grow by 5.0% to 7.0% in 2011. Statistics released by the Singapore Tourism Board (“STB”) showed that visitor arrivals to Singapore registered a 15.0% year-on-year growth to reach 5.3 million as at May 2011. STB is on track to achieveits forecast of 12 to 13 million visitor arrivals in 2011.

Dr Riady commented, “Singapore’s positive economic outlook, coupled with the projected increase in visitor arrivals in 2011, is expected to benefit the Group’s hospitality and retail businesses in Singapore. OUE through its Hospitality division manages and operates two five-star hotels in Singapore − Mandarin Orchard Singapore and Marina Mandarin Singapore − both of which continue to experience strong average occupancy rates. The recent addition of Crowne Plaza Changi Airport Hotel to our portfolio will further boost our market share in the hospitality sector.”
Premium Commercial Assets Continue To Drive Growth

On the commercial property front, CB Richard Ellis (“CBRE”) anticipates that demand for office space will remain healthy. According to CBRE1, the prime and Grade A office rent in 2Q2011 averaged S$8.80 psf pm and S$10.60 psf pm, respectively. This reflects an increase of 2.3% and 2.9% quarter-on-quarter, respectively, as office rent continued to trend upwards in 2Q2011.

The rise in OUE’s recurring income was mainly due to rental contribution from DBS Building Towers One and Two which were acquired on 30 September 2010, and from OUE Bayfront which commenced leasing operations in 1Q2011.

Just last week, OUE announced that OUE Bayfront on Collyer Quay has achieved over 77% take-up of the office net lettable area. In addition, nearby Change Alley Aerial Plaza Tower and the Change Alley Link Bridge, with a combined net lettable area of 14,654 sq ft, have been fully leased to retail and F&B tenants. Both buildings are newly refurbished and have been renamed OUE Tower and OUE Link respectively.