Why everyone was expecting the 3% contraction in UOL's 2013 profits

Is it too predictable?

According to DBS, the decline in UOL’s 4Q13 net profit to S$189.2m was expected and was a function of lower development profits and smaller revaluation surplus vs a year ago, partly offset by a S$27m writeback of provision for the Upper Pickering office component.

On a full year basis, reported PATMI of c.S$786m was 3% lower yo-y.

Here's more from DBS:

Ex-revaluation and exceptional items, bottomline was down by 5%. In recognition of its 50th anniversary, the group has proposed a final DPS of 15Scts and special DPS of 5Scts. In total, this translates to a yield of c3.3%.

The slower stream of residential profits came largely from ongoing projects such as Spottiswoode Residences, Archipelago, Katong Regency and Thomson Three.

The slack was partially filled by higher hotel contributions as the group enjoyed Revpar growth of 5% portfolio-wide as well as better rental and fee income. 

Looking ahead, the group continues to focus on growing recurring income as well as selectively landbank to restock inventory. FY14F earnings will also be boosted by S$96m pre-tax profit from the sale of the Jln Conlay land in Malaysia.

The recent launch of 515-unit Riverbank in Fernvale received a 41% take up rate at an ASP of just above $1000psf. Meanwhile, its latest win of a 216,120sf site in Upper Paya Lebar for an attractive S$392m (or S$648psf ppr) with a potential for 780 condos has extended its residential development income visibility.