UOAD  has  successfully  sold  an  office  block  in  Bangsar  South  for MYR72.5m, or MYR930 psf. We revise our FY13 earnings forecast by 8%, given  the  resulting  MYR48.2m  gain  on  disposal.  As  valuations  are getting  undemanding,  at  7%,  UOAD’s  dividend  yield  is  increasingly attractive.  However,  as  the  sector  still  lacks  positive  catalysts,  we maintain our NEUTRAL rating on the stock for now.

• Disposal of an office block.  On 30  Dec 2013, UOAD sold a 12-storey office block  –  where its headquarters  are located  –  to Marak Moden SB. The latter  is  a private company  held  under  Dato’ Fu  Ah Kiow  and Dato’ Kong  Hon Kong, who own  NV Multi Asia  SB.  Its  principal activity is  the setting up of swiftlet farms.
• A good price. The property is held as an investment property for UOAD. At  MYR930psf,  the  transacted  price  was  attractive,  given  that  past  en bloc  transaction  prices  in  Bangsar  South  have  always  been  in  the MYR750-800 psf range. Post disposal, UOAD will have to pay a monthly rental of MYR362,700 for three years. After this period, management has plans in place  to move to  a  new 50-storey corporate tower, which will be ready by then.
• Two more  blocks  available.  UOAD  has  two  more office blocks  –  one big and one small – in Bangsar South still available for sale. The potential sale  of  these  properties  will  help  buffer  any  downside  in  its  property development earnings  going forward, as a result of  the  slower sales due to the Government’s property sector cooling measures.  
• Forecasts.  The  disposal  will  result  in  a  gain  of  MYR48.2m.  Given  the higher-than-expected amount, we revise our FY13 earnings forecast  by 8%.  The gain has also enhanced the  outlook for dividends  in  FY13. Our DPS forecast is 13 sen.
• Valuations.  As  valuations  are  getting  undemanding,  UOAD’s  dividend yield  is  increasingly  attractive  at  7%.  However,  as  the  sector  still  lacks positive catalysts over the near-term, we maintain our  NEUTRAL  rating on the stock for now. FV is kept at MYR2.45, based on a 25% discount to RNAV.

Financial Exhibits

SWOT Analysis

Company Profile
UOAD is a Klang Valley-based developer. The company specialises in building high-rise residential and commercial developments. Its flagship development in Bangsar South has seen strong en bloc transactions.

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Source: RHB