OUE

OUE: Reported FY10 Results which were-inline, with Rev at $215.6m, +56.8%YoY, while Net Profit was at $777.2m, vs a Net Loss of $93.4m, YoY, due largely to fair value/other gains of $771.7m. Core Profit from Operations was at $78.1m, +250%YoY....

Robust performance driven largely by improved contributions from grp’s hospitality and retail divisions, with Rev +32.1% at 172.3m, while Property Investment division, comprising DBS Towers and Mandarin Gallery also lifted income with healthy rev contribution of $38.5m....

Going forward, grp has obtained TOP of its OUE Bayfront, and has achieved 60% of pre-committed leases for the 18th storey Grade A Office Tower, and remains upbeat on its prospects for 2011, aiming to continue building a strong recurring income base across its well diversified portfolio of prime commercial, residential, retail and hospitality assets in SG....

While reports that SG Jan visitor arrivals for 2011 continued the uptrend, at 1.06m +16.2%, would continue to bode well for the industry and OUE, with industry’s Gazetted hotel room rev at $176m, +25.8%YoY, while avg occupancy rate inched up 1 ppt to 82% and rev per room rose 19.8% to $183. Separately, a mkt survey showed that in terms of actual room rates, SG's prices still lag behind some mkts in the region, giving space for further rate hikes….

We note that grp’s Balance Sheet remains strong with a Net Cash Position of $226.4m, while NAV/Share currently stands at $2.86. Taking into acct the valuation surplus on Mandrian Hotel, which was not incorporated into accts, NAV/share would be at $3.89, which would see grp trade at a meer 0.72x P/B, which is unwarranted in our view, and gives space for further rerating upwards. CS maintaints Out Perform with $4.20 TP.