Good to have some discussion on one of my favourite stocks!...

Good to have some discussion on one of my favourite stocks!

Steve - I realise that UOA is their biggest asset, but I am not sure why you are excluding other parts of the business such as their ~30% holding in UOA Real Estate Investment Trust and 100% owned assets in Australia. If you refer to the UOS annual report, Net Assets attributable to the parent (i.e. shareholders) is AU$1.7 billion, or $1.15 per share (note: this accounts for the share of UOA that they do not own). This puts the current share price at less than 50% of NTA, the lowest it has been in 10 years (per my chart below).



From their last AGM, they told me that inventory (on the balance sheet) is typically sold at a margin of 30-35%, and previously they have sold investment properties at a 20% premium - the most recent example, the sale of UOA Tower in the midst of COVID for 22% profit. Land is also held at cost.

All of these things considered, i estimate that real NTA (i.e. market value) to shareholders is around AU$1.30-1.40 per share (pretax).

Having said that, I agree that a turn-around in EPS is the key to improving the share price of UOS. As per the chart below it has been on a downward trend for many years. However, i think there is a deliberate strategy here, in that they are transitioning to more recurring revenue / earnings from rent, parking, hotel operations etc (via UOA), rather than development profits. This strategy has been impacted by COVID for the past few years. If you look at the latest UOA quarterly "other" revenue (and profit) is up very significantly and now back higher than pre-COVID levels. Other revenue is mainly rent, parking fees etc. At 86 million RMD other revenue is now at an anualised level of 344 million RMD (40% up on 2022 and 110% up on 2021). It is also now almost at the level of property sales revenue.

The interim dividend of 20 sen announced by UOAis significant. as far as i am aware this is the first time they have issued an interim dividend. The fact that it is 2x the final dividend is also noteworthy. Possibly it reflects the fact that they are comfortable the business has stabilised post COVID and they can rely on this ongoing and growing recurring revenue / earnings going forward. It will be very interesting to see if UOS follows with an interim dividend when they announce (probably on 31 Aug - the last possible day!).