RHB IB lowers target price for UOA Development to RM1.71

• RHB’s Loong Kok Wen said she expects its investment properties to drive earnings slightly in the coming quarters, premised on higher occupancy rates.

KUALA LUMPUR (July 10):  RHB Investment Bank research has maintained its “neutral” rating on UOA Development Bhd (UOAD) at RM1.58 with a lower target price (TP) of RM1.71 (from RM1.86) and said the developer’s launches are going as planned and UOA Development’s new F&B business should complement its property projects.

In a note on Monday (July 10), RHB’s Loong Kok Wen said she expects its investment properties to drive earnings slightly in the coming quarters, premised on higher occupancy rates.

“While its net cash is still solid at RM2.2 billion, catalysts are lacking — especially in view of the current market risk arising from the upcoming state elections.

between urban development and the economic resilience of small and medium enterprises (SMEs) in the urban market.

“Our new TP is now based on a 45% discount to RNAV (from 40%), with a 2% ESG discount applied,” she said.

Loong said while construction works and, as such, billings from ongoing projects are progressing as usual, she expects the recurring income from UOAD’s newer office assets to pick up further in the coming quarters.

“New retail spaces at United Point and South Link (combined NLA of about 230k sqf) have higher occupancy rates of more than 70% and more than 50%.

“In 1Q23, all of UOAD’s investment properties contributed RM74.6 million (under other income, +46% y-o-y) to net profit. New property sales and unbilled sales stood at RM124 million and RM226 million,” she said.