UIC’s revenue plunges 54% to S$235.7m

In line set of results. UIC reported a 23% y-o-y rise in net profit to S$136.7m on a 54% drop in revenue to S$235.7m, thanks to higher associate income and revaluation surplus of S$147.8m. As a result, book NAV was lifted to $2.82. Excluding revaluations, net profit would have been S$55.7m, down 44% y-o-y and in line with estimates.

Dragged by completion of residential projects. The decline in profits was due to reduced residential development income following completions of projects such as One Amber and grand Duchess last year as well as negative rental reversions. This was partially offset by higher hotel contributions.

Focus on rebuilding UIC Building as next growth driver. Looking ahead, with the lack of a residential landbank in Singapore, the group is likely to focus on redeveloping UIC Building into a mixed office/residential property to support income visibility in the medium term, in addition to rental income.

Recommendation
Maintain Fully Valued, TP $2.30. UIC is trading at a 17% premium to our RNAV of S$2.42 and at a slight premium to its book NAV of S$2.82. At this level, we believe the stock has fully priced in the redevelopment potential of UIC Building as well as the improvement in the office market. Our TP of S$2.30 is pegged at a 5% discount to RNAV. At this level, we believe Singland offers
better value.