UOL eyes more overseas assets to buck sluggish local property market

It wants a 70/30 asset split.

UOL Group is looking to enlarge is overseas asset base in order to buck the challenging local property market. According to CIMB, UOL is targeting a 70/30 asset split between Singapore and overseas locations.

UOL currently has a 85/15 asset split, but it is looking to widen its geographic footprint to include the UK as well as China, Myanmar and Indonesia.

“ As a direct and indirect (via UIC) owner of one of the largest retail and office properties in Singapore as well as a sizeable hotel portfolio, it has a strong recurrent income base in addition to a stream of residential earnings in FY15-16 from locked-in presales. In the longer run, the target to establish a 70/30 asset split in Singapore vs. overseas would enable it to widen its geographic footprint to both developed and emerging economies. We think the potential for corporate exercise exists as the group’s stake in UIC inches closer to 50%.” noted CIMB.

Here’s more from CIMB:
Furthermore, as the direct and indirect (via UIC) owner of one of the largest and growing retail and office portfolios in Singapore, leasing income is robust while redevelopment potential at some of its older properties could enhance returns in the long term. 

In terms of potential corporate exercise, we think as UOL’s stake in UIC approaches 50%, there is room for UOL to explore more avenues and opportunities to generate more operating efficiencies and economies of scale from this portfolio. 

UOL remains one of our top picks in the Singapore property sector. At 38% discount to RNAV, valuations are attractive. We believe UOL has significant embedded value within its own as well as UIC and Singland’s investment property portfolios.