KUALA LUMPUR (May 27): Despite expectations that the property market is soft this year, UOA Development Bhd expected the group to maintain a consistent revenue for current financial year with the launches of several mixed development projects worth RM2.4 billion of gross development value (GDV) in Klang Valley.
UOA (fundamental: 3; valuation: 1.8) general manager Eugene Lee said that the outlook for this financial year’s revenue will be stable but the sales is expected to be lower than last year.
“We have quite a few projects in advance, so the recognition of the revenue will be quite fast. The [revenue] outlook will be stable, close to what we have last year,” Lee said.
As at Dec 31, 2014, UOA’s recorded revenue of RM1.08 billion, and its net profit stood at RM356.84 million. UOA development contributed 70% of the UOA Group earnings, while the remaining 30% is from UOA Real estate Interest Trust (REIT) and other investments.
On the outlook of property market, Lee admitted that this year will be “less vibrant” as the implementation of the goods and services tax in April as well as the tightening of bank lending last year would affect the outlook.
He said the company booked RM1.7 billion worth of sales last year, but expected the sales would not on par this year.
According to Lee, UOA has RM2.4 billion GDV worth of projects to be launched in the second half of this year.
“We have a few projects in the pipelines, our primary focus is more on affordable segment which is ranging between RM600,000 to RM700,000. This is the strategy we adopted since last year,” Lee told the media after the company’s annual general meeting this morning.
Lee pointed out that the projects are mainly located at areas that are accessible through highways or public transport such as the Mass Rapid Transit, KTM commuter or light rail transit.
He highlighted the company’s main project in Kepong, a mixed integrated development on 10 acres of land, has a GDV of RM1.5 billion. The project, expected to be launched in the second half of 2015, was accessible through Duta Ulu-Kelang Expressway (DUKE) highway extensions.
In addition, he said, UOA would launch another mixed development project in Setapak in the fourth quarter this year, with a GDV of RM230 million.
Adding to the portfolio are Suria @ North Kiara project (GDV of RM120 million), Desa Business Suite (GDV of RM300 million) and Verticle Corporate Tower in Bangsar South (GDV of RM1 billion).
Lee also pointed out that as of now UOA has a total land bank of 120 acres, with an approximate GDV of RM24 billion, which “would keep us busy for the next five to ten years.”
Out of the 120 acres of land, UOA is looking to develop two pieces of freehold land located strategically at Jalan Ipoh with a total size of 30 acres into another “Bangsar South” for a GDV of RM6 billion.
“The Jalan Ipoh project has the right elements to be a successful project. It is big enough to change the landscape. It has the MRT, highway and [is] close to city center. It will be ready to launch in the second half of 2016,” Lee said.
He said that as of end-Dec 2014 the company sits on a cash pile of about RM700 million and borrowings stood at about RM60 million, which gives the company ample cash to expand its land bank.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)