OUE (formerly: Overseas Union Enterprise)

I find today's announcement on the latest valuation of Mandarin Gallery and Mandarin Orchard - OUE's principal property assets on Orchard Road - rather interesting.....
http://info.sgx.com/webcoranncatth.nsf/V...D003C65C2/$file/Announcement_on_Valuation_of_MOS_MG.pdf?openelement

Both properties - sitting on 99-year leasehold (from 1Jul1957) land owned by Ngee Ann Kongsi - have been revamped/updated at substantial costs (funded by debts) last year.  As the remaining land leases have less than 46 years to run, unless their rental rates (and those along the Orchard Road belt) continue to hold or rise over time, the capital values of these 2 property assets will likely have to fall with the remaining lease periods.  

It is also interesting to note that based OUE's last done share price of $2.99, Mr Market is attaching a 31% premium above its NAV/share of $2.28 as at 30Jun10.  It looks like Mr Market is quite willing to value this counter based on and closer to its RNAV, which is not the case for most other property counters.

I think today's announcement on a proposed placement of shares by a controlling shareholder is another indication that Mr Market may be pricing OUE too richly.....
http://info.sgx.com/webcoranncatth.nsf/V...400426DEF/$file/Announcement_on_Proposed_Placement_by_Controlling_Shareholder.PDF?openelement

(29-09-2010, 09:03 PM)dydx Wrote: I find today's announcement on the latest valuation of Mandarin Gallery and Mandarin Orchard - OUE's principal property assets on Orchard Road - rather interesting.....
http://info.sgx.com/webcoranncatth.nsf/V...D003C65C2/$file/Announcement_on_Valuation_of_MOS_MG.pdf?openelement

Both properties - sitting on 99-year leasehold (from 1Jul1957) land owned by Ngee Ann Kongsi - have been revamped/updated at substantial costs (funded by debts) last year. As the remaining land leases have less than 46 years to run, unless their rental rates (and those along the Orchard Road belt) continue to hold or rise over time, the capital values of these 2 property assets will likely have to fall with the remaining lease periods.

It is also interesting to note that based OUE's last done share price of $2.99, Mr Market is attaching a 31% premium above its NAV/share of $2.28 as at 30Jun10. It looks like Mr Market is quite willing to value this counter based on and closer to its RNAV, which is not the case for most other property counters.

Hi dydx,

have u notice this counter called hongkong chinese 0655.hk? NAV HKD3, current price HKD1.05. they have a big stake in the lippo fund which in turn own OUE.

Vested in the former.

cheers,
bongster31

I was wondering why there was no discussion on this company since 2010. I like the tourism story (robust growth for the next 5 years), I like the Riady family (proven track record in making money). I liked that it was undervalued. Until now. So happy that value is (possibly) being unlocked.

One thing that differentiates it from other property counters is its diversification. It has a finger in the pie of residential, retail, hospitality and commercial assets. In its annual report it explains that these segments do not move in tandem, hence any downturn in one would be cushioned by the others.

As an asset play, its NAV is $3.21, and as recently as May '12 it dropped to sub-$2. I was drip-investing in it up to $2.40.

(vested)

SINGAPORE - Shares of Singapore property developer Overseas Union Enterprise jumped 10 per cent to its highest level in more than a year after a newspaper report said it was planning to sell a hotel and retail asset in the city-state.

OUE shares hit an intraday high of S$2.90, the highest since Aug 2 last year, before retracing to S$2.89.

The Business Times reported on Wednesday that OUE could be selling its landmark Mandarin Orchard Singapore hotel and the adjoining Mandarin Gallery mall, valued at S$1.18 billion and S$520 million, respectively, last year.

American property fund manager Pramerica, partnering with Abu Dhabi Investment Authority, could be potential buyers, the Business Times reported, citing unnamed sources. - REUTERS

Credit Suisse short covering today. Dont worry, they will be back to short again once the bad news are out. Lousy SAI company loaded with debts and a lousy development project that cannot sell. Also revaluation surplus of around 0.8 billion dollars baked into their balance sheets.

I will stay far away from this crap.

Granted, OUE is having difficulties moving Twin Peaks but that is the only residential project on its books. The key to this deep value play is that OUE's Mandarin Orchard and Mandarin Gallery are not revalued to market and carried at cost. Hence, the book value of OUE (S$3.54 for 1Q2012) grossly understates the current market value of these assets. The Orchard properties add over a billion to its balance sheet and consequently brings down its gearing as well.

(20-09-2012, 08:44 AM)newyorkcityboy Wrote: Granted, OUE is having difficulties moving Twin Peaks but that is the only residential project on its books. The key to this deep value play is that OUE's Mandarin Orchard and Mandarin Gallery are not revalued to market and carried at cost. Hence, the book value of OUE (S$3.54 for 1Q2012) grossly understates the current market value of these assets. The Orchard properties add over a billion to its balance sheet and consequently brings down its gearing as well.

No not really, I refer you to the 2010 /2011 FY statements where OUE book a profit of 700++ million/200++million from their investment properties.

How is Mandarin Orchard worth 1billion? Its not even a freehold piece of land but a 99-year lease from The Ngee Ann Kongsi from 1 July 1957.

Maybe they are really lucky if they can find a sucker out there to buy it for 1billion ++.

I will not touch this piece of Crap.

Think there are better property companies out there to own. Looking for upside agree mandarin orchard cannot fetch this kind of valuation.

In my book, hpl/hotel g c/hotel royal are better due to better gearing, more "upside" in their property holdings.

Sep 20 2012
CIMB ups target price for Overseas Union Enterprise

CIMB Research raised its target price for property developer Overseas Union Enterprise Ltd to S$3.38 from S$2.98 and kept its 'outperform' rating, citing expected gains from the potential sale of its hotel and shopping mall assets.

By 0206 GMT, OUE shares were down 0.7 percent at S$2.93, having surged 39.5 percent so far this year, compared with the FTSE ST Mid Cap Index's 25 percent rise.

OUE said on Wednesday it has offered a potential buyer exclusivity to do due diligence Marina Orchard hotel and Marina Orchard shopping mall in Singapore, which CIMB said could fetch higher-than-expected prices and special dividends from the disposal gains.

"Divestment of Mandarin Orchard at this stage of the cycle when room rates and occupancy are at historical highs will allow OUE to extract near maximum value from this asset," said CIMB in a report,

Sale of OUE's Mandarin Orchard hotel, which is valued at S$1.18 billion, would lead to a divestment gain of about S$1.06 billion and an increase in OUE's book value by 27 percent.

1009 (0209 GMT)

(Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)
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(Vested)