UOL swings to 1H21 net profit on higher revenue from property development

UOL Group’s Kinex mall in GeylangUOL Group’s Kinex mall in Geylang

UOL reported Thursday its first half swung to a net profit of S$91.34 million from a year-earlier loss of S$82.14 million on higher revenue from property development and lower fair value losses.

Revenue for the January-to-June period increased 31 percent on-year to S$1.19 billion, with higher contributions from property development and property investments, the property developer said in a filing to SGX.

Attributable fair value losses narrowed to S$16.9 million in the first half from S$185.8 million in the year-ago period, UOL said.

Property development revenue increased 81 percent on-year to S$687.5 million on higher progressive revenue recognition from Avenue South Residence, The Tre Ver and Clavon in Singapore, partly offset by lower revenue from the Amber45 and V on Shenton projects in Singapore and Park Eleven in Shanghai, China, UOL said.

Revenue from hotel operations, technology operations and investment income fell in the period.

Hotel operations revenue fell 8 percent to S$126.1 million, mainly on the impact of the Covid-19 pandemic on the Singapore hospitality industry as government quarantine facility contracts declined, partly offset by higher hotel revenue in China as tourism recovered there, UOL said.

Technology operations revenue declined 9 percent on-year to S$107.9 million in the first half on lower sales of services as global supply constraints resulted in delays, UOL said.

Investment income revenue shrank 41 percent on-year in the first half to S$17.5 million on a decrease in final dividends and the absence of special dividends from UOB, the company said.

UOL issued a cautious outlook.

“Despite healthy demand in Singapore’s private residential market, we remain concerned about rising construction cost due to manpower shortage and supply chain disruptions. These challenges amplify the urgency to work towards strengthening the industry resilience,” Liam Wee Sin, UOL group CEO, said in the statement.

“The impact of the pandemic has also prompted rethinking on the usage, design and space requirements of the various real estate asset classes. There is a need for more flexible planning approach to adapt and respond to changes such as hybrid working, accelerated online shopping, and the increased focus on health and well-being and climate change,” he added.

UOL said office rental demand may face headwinds in the medium term, despite expectations Singapore office rents will rise in the near term, as more firms are reviewing their needs due to the pandemic.

The developer also cited concerns over hits to retail rents by tightening measures earlier this year to stem the spread of the Covid-19 virus, and concerns the hospitality sector will continue to be hurt by the absence of international visitors in Singapore and challenges in the U.K. due to Brexit.

Read more details on UOL’s earnings report.