Higher occupancy rates a boon for UOA

PETALING JAYA: UOA Development Bhd’s investment properties business is expected to drive earnings slightly in the coming quarters, premised on higher occupancy rates, according to RHB Research.

“While construction works and, as such, billings from ongoing projects are progressing as usual, the research house expects the recurring income from the group’s newer office assets to pick up further in the coming quarters.

“New retail spaces at United Point and South Link (combined net lettable area or NLA of about 230,000 sq ft) have higher occupancy rates of more than 70% and more than 50%.

“In the first quarter of 2023 (1Q23) , all of its investment properties contributed RM74.6mil under other income, up 46% year-on-year (y-o-y) to net profit.

“New property sales and unbilled sales stood at RM124mil and RM226mil,” the brokerage added.

Pipeline launches are going as planned and the group’s new food and beverage (F&B) business should complement its property projects, it added.

While the property investment and development group’s net cash is still solid at RM2.2bil, catalysts are lacking, especially in view of the current market risk arising from the upcoming state elections, RHB Research said.

“Our new target price is now based on a 45% discount to revalued net asset value (from 40%), with a 2% environmental, social and governance (ESG) discount applied,” it added.

UOA Development recently announced its involvement in a new F&B business via a 51%-owned subsidiary which operates Botanica Co Restaurant and Potager.

“We understand that this F&B business is already profitable, but management has no plans to aggressively expand this new venture.

“The F&B business is mainly to complement existing and upcoming projects (such as Bamboo Hills) in order to create awareness and boost catchment.

“Currently there are two Botanica restaurants, and the first Potager will be opened later this year at Bamboo Hills,” the research house said.