Journey to Wealth
UOAD - Fraser Hospitality to manage 'hotel
News UOA Developments (UOA) has engaged Fraser Hospitality Pte Ltd to manage premium floors of Camellia Serviced Suites @ Bangsar South City (more details below). Camelia will only be completed in midFY13. This is UOA's first collaboration with an international hospitality operator in its foray into the hotel residence sector.
It will be marketed under the boutique hotel residences concept, Capri by Fraser, which is targeted at young professional adults who enjoy ICT services.
Comments We are not surprised by the tie-up. UOA has been on the lookout for a reputable hospitality manager like Fraser to manage its service apartments as UOA wants to test the potentials of the hospitality market in Bangsar South City (BSC). The overall plan of BSC includes a hotel, although it is very much 2-3 years down the road before they start the project, depending on the feasibility of it.
We are positive on the news because of Fraser's branding and its presence is an indication of the pent-up demand for short-stay occupants since Fraser is a well-established hospitality operator.
Outlook Major upcoming launches are Glenmarie City (GDV RM1.0b) in Sept-12 and Kiara IV (GDV RM0.5b) some time in 2H12.
There is the possibility of another en bloc sales of Horizon offices this year. However, we have not imputed for any new en bloc sales beyond the current one.
Forecast Earnings impact is likely to be up to 2%-3% of annual earnings. However, full occupancy is too optimistic at the start of operation plus it will only be completed in mid-FY13. Hence, we are maintaining our FY12-13E core earnings of RM269m-RM362m as we do not expect material contributions in the short term.
Rating MAINTAIN OUTPERFORM
We expect UOA's projects to buck the bearish trend while the anticipation of its continuous strong dividend payouts will lend strength to the stock.
Valuation No changes to our TP of RM1.65, based on a 52% discount* to FD SOP RNAV of RM3.46.
Risks Unable to meet sales targets. Fall-through of en bloc sale. Sector risks, including negative policies.
Source: Kenanga
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