SINGAPORE (Nov 10): DBS is maintaining its “buy” on UOL with a higher target price, given its valuation of 0.8 times P/NAV remains attractive with the consolidation of UIC.

In a Friday report, DBS analyst Rachel Tan says successful launches of recently purchased land sites in the en bloc market will be re-rating catalysts for the stock.

“We have lifted our target price to $10.15, factoring in higher stakes in UIC and raising our ascribed value based on market price previously to NAV,” says analyst Rachel Tan.

She says DBS is more positive than consensus as it expects UOL stands to benefit from improved sentiment in the Singapore property and hospitality segments.

As the earliest to landbank at a lower price, UOL stands to benefit from the improved sentiment in Singapore property segment.

In addition, the turnaround in the hospitality segment bodes well for UOL’s hotel properties, and now with UIC’s hotel properties.

Potential catalysts include more landbanking, strong sales takeup, potentially gaining more control on UIC to unlock value.

To recap, Singtel’s 3Q17 results were boosted by gain from acquisition/consolidation of UIC.3Q17 net profit of $618 million, included gain on acquisition and consolidation of $542 million but partially offset by $15 million of business acquisition costs.

Excluding the effects of consolidation, 3Q17 net profit fell 13% y-o-y to $76 million.

Key positives include roperty launches in FY18-FY19 with potential gross development value (GDV) of $1.4 billion or more, and potential to raise its stake in UIC without general offer.

Shares in UOL are trading 2 cents lower at $8.78 or 15.8 times FY18 earnings.