Overseas Union Enterprise

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Revising earnings and target price, Maintain Buy, RNAV of S$4.58

Taking into account the divestment of its China hotels, we adjust our FY13-15 core net profit estimates by -10%. We also widen our target discount to 35%,back to long term averages, reflecting the derating of the larger cap developer stocks within the sector, and the lack of visibility on the redeployment of capital which would help offset the hollowing out of the asset base of the company.

Hence we, cut our target price by 13% to S$2.98, implying 25% upside.

We believe that value unlocking moves such as the proposed commercial REIT could help to narrow NAV discounts, maintain Buy.

Source: DB

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OUE’s ($2.51, up 3 cents) 4 Dec’13 EGM to propose the sale of OUE Bayfront to OUE C-REIT for a minimum of $1bln if successful will see shareholders receiving 1 free OUE-HT for every 6 existing OUE shares owned.

Management said that the distribution of free OUE-HT shares is conditional on OUE shareholders approving the sale of OUE Bayfront to
OUE C-REIT as this will enable OUE to raise funds to repay bank borrowings of US$377mln.

If OUE shareholders do not approve the sale, management may then have to reduce their stake in OUE-HT to 33-35% from 45.2% currently to repay borrowings.

OUE’s share price has risen 13 cents in the past 2 days in anticipation of the approval. OUE-HT minority shareholders on the other hand will see “share overhang” from either the free distributions or OUE paring down their stake further from 45.2% to 34% if OUE shareholders do not give the go ahead for the sale of OUE Bayfront.


Shares: Lim & Tan

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vested

Units of OUE Commercial Real Estate Investment Trust (OUE C-Reit) are said to have been priced at 80 cents each, representing a dividend yield of 6.8% for its $400m initial public offering.

To comprise an initial portfolio of OUE Bayfront in Singapore and the Lippo Plaza in Shanghai, OUE C-Reit is the second Reit in six months to be spun off from OUE Ltd, which listed OUE Hospitality Trust (OUE H-Trust) last July.

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Overseas Union Enterprise- Potential 14% special dividend payout following the listing of OUE C-REIT.
(OUE SP/BUY/S$2.39/Target: S$3.04)
FY14F DPU Yld (%): 8.8
FY15F DPU Yld (%): 1.7

6.3% special dividend in sight. OUE has announced a one-for-six distribution in specie of OUE Hospitality Trust (OUE H-Trust), equivalent to S$0.15 dividend or 6.3% yield, contingent on the divestment of OUE Bayfront to OUE Commercial REIT.

OUE will retain 33-35% of OUE H-Trust post divestment, down from 45% currently. With the successful divestment and listing, OUE will likely announce the special dividend within the next quarter.

Maintain BUY with a lower target price of S$3.04, pegged at a 30% discount to our RNAV of S$4.34/share. OUE is trading at a deep 45% discount to our RNAV.


Source: UOBKH

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Overseas Union Enterprise (OUE SP)

4Q13: Feedback From Management Briefing

OUE rewarded shareholders with a special 7.1% dividend yield largely from 1-for-6 distribution of OUE H-Trust units.

Ongoing asset enhancements and developments will improve existing asset base, while the establishment of a capital recycling REIT platform will enable OUE to monetise the assets once stabilised.

Management sees value overseas in Indonesia, US and Japan for acquisitions.

Maintain BUY and target price of S$3.04, based on a 30% discount to RNAV of S$4.34/share.


Source: UOBKH

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OUE Limited – Transformation in Progress

Recommendation: ACCUMULATE
Previous Close: S$ 2.35
Fair Value: S$ 2.70

OUE FY13 revenue increased 4.5% y-y to $436.6mn, mainly due to the higher revenue recognition from property development

Recorded a net attributed loss of $36.6mn in FY13 ($90.1mn in FY12), largely due to net fair value losses of $76.8mn

Strong cash position of $730.6mn from listing of OUE H Trust

Propose a final dividend of 2 cents per share, bringing total cash dividend for FY13 to 23 cents per share

Special distribution-in-specie of OUE H Trust in 1Q14

Maintain Accumulate with new FY14 TP $2.70


Source: Phillips

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OUE Limited - 1Q14 Results First Take

OUE’s 1Q14 recorded high net profit of about $1012mn, which was more than 100% increase for the same quarter in FY13. This was mainly due to the gain from unlocking the values of Mandarin Orchard Singapore and Mandarin Gallery which was disposed to OUE H Trust in 3Q13.

Revenue was $107mn, an increase of 1.5% y-y with higher EBIT at $40.2, an increase of 4.5% from $38.5mn in 1Q13.

Revenue from the Hospitality Division decreased 11.6% to $52.3mn for 1Q14 with the absence of contribution from the China Hotels which was sold off in FY13.

Revenue from the Investment Division increased 62.7% with new contributions from Lippo Plaza property (acquired by OUE C REIT) and US Bank Tower.

Revenue from Property Division was weaker with a drop of nearly 50% to $9.4mn. With the consolidation of OUE C REIT and deconsolidation of OUE H Trust,

OUE now holds a cash position of $864.6mn for future developments. A report shall be released at a later date.


Source: Phillips

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1Q14: Profits Soar To S$1b On Deconsolidation, Taking A Provision For Twin Peaks

In-line results were boosted by the deconsolidation of OUE H-trust (s$986m) and revaluation gain on Lippo Plaza (s$115m) while being partially offset by the writedown on Twin Peaks (S$105m).

Ongoing asset enhancements and developments will improve the existing asset base, while the establishment of a capital recycling REIT platform will enable OUE to monetise the assets once stabilised.

Maintain BUY with a target of S$2.80 based on a 30% discount to revised RNAV of S$4.02.

source: UOBKH

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OUE Limited: Significant boost from fair value gains

OUE reported 1Q14 PATMI of S$945.6m, which is up more than 100% YoY due to fair value gains from Lippo Plaza (S$114.8m) and Mandarin Orchard Singapore and Mandarin Gallery (S$986.4m), offset by an allowance for foreseeable loss of S$105.0m from Twin Peaks.

Adjusting for the impact of these one-time items, we estimate core 1Q14 PATMI at S$6.5m which is broadly within expectations. In terms of the topline, 1Q14 revenues increased 1.5% to S$106.9m; this was mainly due to new contributions of the Lippo Plaza property and the US Bank tower, offset by a S$9.1m dip in property development income.

Maintain BUY. Our fair value estimate is adjusted to S$2.87, from S$3.32 previously, after incorporating into our model the new structure of the group after its listing of OUE Commercial REIT.

Source: OCBC

[winston]

OUE Limited – Invest on attractive valuation
Recommendation: ACCUMULATE
Previous Close: S$ 2.32
Fair Value: S$ 2.59

OUE’s 1Q14 PATMI soared to $945.6mn (>100% increase y-y) with the gain from unlocking the values of Mandarin Orchard Singapore (MOS) and Mandarin Gallery (MG).

Recorded revenue at $106.9mn, an increase of 1.5% y-y and gross profit at $60.4mn, an increase of 9.4% due to higher rental revenue with contribution from Lippo Plaza property and US Bank Tower.

A cash war chest of $846.6mn after divestment of OUE Bayfront to OUE C REIT

Maintain Accumulate with revised TP $2.59

Source: Phillips