OUE

OUE: 3Q14 in line to disappoint. Net profit of $26.1m (3Q13 net loss: $6.2m), although revenue fell 10.8% to $106.3m, mainly due to lower contribution by hospitality and development property divisions, partly offset by dividend income. Property saw lower sales from Twin Peaks, which only sold one unit in the quarter at $2984 psf, meanwhile hospitality revenue fell on absence contribution of China Hotels following disposal in 3Q13. Bottom line was shored up by a 47.9% reduction in finance expenses to $13.2m, a 177% increase in share of JV and associate’s profits to $13m, a $3.6m gain in fair value investments and an absence of a $5m loss on disposal of subsidiaries. Deutche notes commercial portfolio is ramping up, a bright spot. Extension building to Crowne Plaza Changi Airport commenced Aug’14 and expected to complete in 2015. Aside, AEI at OUE Downtown and U.S Bank Tower is on track. BVPS of $4.06 translates to 0.5x P/B. Latest broker ratings: Deutsche maintains Buy with TP of $2.43