UOL Group: Delivering big and gearing up for more
- Strong set of 1H25 results, with operating PATMI of SGD207mn (+45% y/y), a marginal beat
- Residential earnings supported by robust sell-through rates and strategic replenishment of landbank
- Higher recurring income, driven by total portfolio optimisation strategy, to potentially lift dividends
- Maintain BUY with a higher TP of SGD8.80; redevelopment of Marina Square a key catalyst
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Meanwhile, the group saw higher recurring income from the newly acquired interest in 388 George Street in Sydney, improved performance from Singapore Land Tower following the completion of its AEI, and new contributions from Odeon 333 which began operations in July 2024. Finance expenses fell 12% y/y to SGD 90.7mn and effective weighted average cost of debt dropped 45bps y/y to 3.34% in 1H25, and the group’s net gearing ratio remained conservative at 0.25 as of 30 June 2025.
The group continues to build on its strong track record as an established property developer, with its residential projects well-received, including Watten House, Pinetree Hill, Meyer Blue, Parktown Residence, and the most recent Upperhouse. Contributions from these developments will be progressively recognised over the next three to four years, supporting earnings visibility.
We estimate that the group has fewer than 350 unsold units across these projects, with sufficient time to sell them before the respective five-year ABSD deadlines. The two upcoming projects in its landbank – Skye at Holland and the Thomson View en bloc – are also expected to see healthy take-up rates at launch. This is underpinned by their attractive attributes, including prime locations, proximity to primary schools and MRT stations, and their presence in mature and desirable neighbourhoods.
Management highlighted that homebuyers today are increasingly discerning due to ABSD constraints and generally only purchase one property. As a result, they tend to be highly selective and are drawn to projects with distinctive strengths i.e., right combination of location, product, and price. UOL’s residential earnings will continue to be supported over the medium term through the strategic replenishment of its landbank. The group demonstrates strong acumen in identifying and acquiring sites and is able to successfully execute and deliver well-positioned products across segments, including both upscale and mass-market offerings, in our view.
UOL’s residential development sell-through rates
Project | No .of units | % sold as of Aug-25 |
Watten House | 180 | 95% |
Pinetree Hill | 520 | 88% |
Meyer Blue | 226 | 69% |
Parktown Residence | 1,193 | 92% |
Upperhouse | 301 | 64% |
Skye at Holland | 666 | Launching in 3Q25 |
Thomson View (en bloc) | 1,240 | Launching in 2H26 |
Source: Company, DBS
UOL consistently focuses on building up stable recurring income. By actively pursuing AEIs, redevelopments, and refurbishments across its investment property portfolio, the group continually strengthens its recurring income streams. This not only diversifies its revenue base beyond the lumpier property development segment but also provides a solid foundation to fund future growth initiatives and enhance shareholder returns. With its commitment to a sustainable dividend policy backed by recurring income, and given the uplift in operating results, we believe there is potential for higher dividends ahead. UOL has a dividend policy of distributing 20-50% of operating PATMI (including realised divestments & gains).
Enhancing recurring income streams
Enhancing recurring income streams
Property | Initiative |
West Mall (Retail) | AEI completed in early 2025 |
Pan Pacific Perth (Hotel) | Refurbishment completed in May 2025 |
Singapore Land Tower (Office) | AEI to be fully completed by 2H25 |
PARKROYAL Parramatta (Hotel) | Refurbishment to be fully completed in 3Q25 |
Clifford Centre (Office) | Redevelopment to be completed in 2028 |
Source: Company, DBS
First foray into UK PBSA as part of strategy of divesting non-core and lower-yielding assets for higher-yield opportunities, and build a more diversified portfolio. UOL acquired a purpose-built student accommodation (PBSA) asset, Varley Park in Brighton, UK for GBP43.5mn. Although PBSA is a new segment for the group, it complements their existing living sector assets, which includes hotels and other hospitality properties. The PBSA sector is counter-cyclical, offering stability and resilience alongside favourable supply-demand dynamics. Amid increasing geopolitical tensions, the UK has become a more attractive destination for international students, further reinforcing demand in the sector. Additionally, high construction costs are limiting new PBSA supply. The group could be looking at acquiring more PBSA assets in the UK, with Australia also identified as a potential target market.
The Varley Park asset comprises 771 beds and is situated near two reputable universities. Occupancy is expected to remain stable as it is currently fully leased to the University of Brighton on a nine-year term, with a break option in year five. While current rental rates are at a 25-35% discount vs. market rates, the lease includes fixed rental escalations for the first two years, followed by CPI-linked increases with a cap and collar structure. The asset is projected to deliver a stabilised yield of 7%.
UOL’s healthy net gearing provides ample financial flexibility to pursue value-accretive opportunities. The current net gearing level stands at c.0.25x, and the hotel portfolio has not been marked to market. With the average developer gearing at 0.5-0.6x, the group would have >SGD5bn in additional capacity, indicating that it could fully debt-fund the redevelopment of Marina Square if it chooses to. However, despite the significant debt headroom, UOL remains committed to maintaining capital discipline.
Progress on the redevelopment of Marina Square. Management highlighted that the project is complex due to the involvement of multiple agencies. Discussions with authorities have been prolonged but remain active and constructive, reflecting its ongoing commitment to collaborating with the government. No other external parties are involved in the proposal. While there are no news yet, progress is underway, and we anticipate greater clarity in the coming months.
Maintain BUY with higher TP of SGD 8.80, pegged to a 40% discount-to-RNAV of SGD14.60. Overall, we continue to like UOL for its residential expertise, active portfolio rebalancing, enhanced recurring income streams and disciplined capital management. Valuations are compelling at 0.5x P/NAV, and we believe that its dual growth engines – property development and property investment – will continue to drive its performance.
Interim Income Statement (SGDmn)
FY Dec | 1H2024 | 2H2024 | 1H2025 | % chg y/y | % chg h/h |
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Revenue | 1,272 | 1,523 | 1,549 | 21.8 | 1.7 |
Cost of Goods Sold | (750) | (927) | (943) | 25.7 | 1.7 |
Gross Profit | 522 | 596 | 607 | 16.3 | 1.7 |
Other Oper. (Exp)/Inc | (207) | (242) | (226) | 9.4 | (6.5) |
Operating Profit | 315 | 354 | 380 | 20.9 | 7.3 |
Other Non Opg (Exp)/Inc | 9 | 49 | 7 | (28.3) | (86.5) |
Associates & JV Inc | (2) | (3) | 1 | nm | (130.0) |
Net Interest (Exp)/Inc | (77) | (73) | (68) | 11.0 | 6.4 |
Exceptional Gain/(Loss) | (8) | 53 | 3 | nm | (93.6) |
Pre-tax Profit | 237 | 381 | 324 | 36.4 | (15.0) |
Tax | (45) | (50) | (53) | 17.7 | 7.1 |
Minority Interest | (62) | (103) | (64) | (3.4) | (38.1) |
Net Profit | 130 | 228 | 206 | 57.6 | (9.8) |
Net profit bef Except. | 138 | 174 | 203 | 46.1 | 15.9 |
EBITDA | 385 | 470 | 456 | 18.5 | (3.1) |
Margins (%) |
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Gross Margins | 41.0 | 39.1 | 39.2 |
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Opg Profit Margins | 24.7 | 23.3 | 24.5 |
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Net Profit Margins | 10.3 | 15.0 | 13.3 |
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Source of all data: Company, DBS
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