3 things UOL can bank on for profit growth

Its new launches will boost topline.

UOL Group should not worry of its 14% profit decline, as there are three things which can boost its earnings in the near to medium term.

According to DBS Group Research, the profit fall was mainly on back of lower earnings from JV companies. Looking at what is in store for UOL, the brokerage firm sees brighter days for the group.

For starters, the firm believes UOL's scheduled launches will boost revenues.

The group is looking to launch The Clement Canopy in Clementi in 1Q17 and also complete the recent en-bloc purchase of Raintree Gardens. The group looks to launch the site in 2018. More so, its Park Eleven in China has sold 131 units out of 168 units at a private launch in September.

"Despite tepid residential transactions year-to-date, UOL’s projects have continued to do fairly well," the brokerage firm said.

Meanwhile, its overseas diversification to London will continue to contribute to the group's recurring income base.

"The strategic acquisitions of 110 High Holborn and 120 Holborn in London at c.5.5% yield will start contributing more meaningfully from 2017 onwards. The Group’s strategy to seek recurring revenues in other regions minimises the group’s exposure to the volatility of any particular asset class and/or country," DBS said.

Lastly, even with the expected mixed performance from hotels and serviced residences in Singapore, the much better performance of its hospitality segment in Australia will offset losses.

To recall, UOL ended 3Q16 with a net attributable profit of $87.1 million.