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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