UOL Group

UOL Group: With the privatisation of Singland (SL) by UIC as good as completed, UOL’s effective stake in Marina Centre Holdings (MCH) is raised from 41% to 46%. Together with UOL’s privatisation of Pan Pac in 2013, Nomura believes UOL now has one of the largest exposures to prime luxury hotels in Singapore. Prime luxury hotels outperformed the market in 2013 as well as during the first two months of 2014 and house think the outperformance could continue on account of: 1) more moderate growth in new supply in 2014-16F (relative to the overall market); 2) ongoing recovery in demand (premium air travel between Europe and Asia growing at a faster pace for instance); and 3) less sensitivity to a strong SGD (vs the economy segment). The privatisation of SL increases UOL’s effective MCH stake and lays the foundation for UOL to further consolidate its control over MCH (and by extension over the portfolio of prime luxury hospitality assets in Singapore) by acquiring additional stake in MCH at the opportune time. Nomura maintains Buy rating, and increased TP to $8.28 (from $8.00).