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Here's how UOL could benefit from the residential property market's recovery
Profit margin could hit 20%.
Amidst growth in the residential property market, UOL could benefit from two upcoming project launches in 2018, KGI said.
Recently, UOL acquired 45 Amber Road site for $156m or $1,117 psf. It is "a relatively good deal" compared to the potential en-bloc sale of nearby Amber Park condo for around $768m, or $1,284 psf, about 15% higher.
The project could reach the prices whilst in the midst of a "probable upturn in the property market and recent sales transactions of nearby condos nearby."
Should the Amber Road project be sold for $1,830-1,920 psf, it could bring the PBT profit before taxes margin to around 15-20%.
Another residential project to consider is the Raintree Gardens site, which was acquired for $334.2m, with land cost of $797 psf ppr, through a joint venture last year.
Here's more from KGI:
With nearby land parcel in Woodleigh sold at $1,110 psf ppr and resale transactions in the vicinity, we think the group could easily target to earn PBT margin from mid-teens (forecast $1,410 - $1,500 psf).
UOL currently has four other residential projects in Singapore launched – The Clement Canopy, Principal Garden, Botanique at Bartley and Riverbank@Fernvale.
Both Botanique at Bartley and Riverbank@Fernvale projects are almost fully sold whilst sales for the other two projects have progressed well in its latest 2Q17 (The Clement Canopy – 59% sold; Principal Garden – 72% sold).
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