Profit soars as UE books revaluation gains

United Engineers executive chairman Zhong Sheng Jian is also the founder of Yanlord Land.
United Engineers executive chairman Zhong Sheng Jian is also the founder of Yanlord Land.

Revaluation gains sent net profit soaring at United Engineers (UE) for the full year, the firm reported yesterday.

Earnings from continuing operations rose 227 per cent to $89.6 million from 2016. This was due mainly to a net revaluation gain of $44.4 million from its investment properties in Singapore, as well as a $16.8 million reduction in the provision for rental support for UE Bizhub East which was no longer required.

A first and final dividend of four cents a share was declared, lower than the five cents a share UE had maintained for years. The firm said this was in order to grow the business. It does not have a formal dividend policy.

In 2016, UE declared a five-cent dividend and special dividend of seven cents a share after divesting MultiFineline Electronix and the environmental engineering business that year. But there were no major divestments last year.

UE did not break down its reporting by quarter.

Turnover in the 12 months to Dec 31 was $539.4 million, up 12 per cent from 2016 on the back of higher revenue recognition from phase 4 of Chengdu Orchard Villa in China and The Manhattan in Malaysia following the completion of the projects.

Property rental and hospitality revenue fell 3 per cent to $131.6 million on lower contributions from UE BizHub West. The average occupancy for UE's investment properties was between 85 and 95 per cent.

UE also provided an update on WBL, the subsidiary it intends to fully acquire from UE shareholder Yanlord Perennial Investment and the OCBC Group.

UE shareholders will vote on the interested party transaction today.

WBL's loss from continuing operations in 2017 came to $497,000, narrowing from a loss of $5 million in 2016. Revenue rose to $359.6 million, from $297.4 million in 2016.

For the first time in years, UE also provided an update on one of its largest projects, Shenyang Orchard Summer Palace.

About 40 per cent of the office block had been sold or leased as at Dec 31 last year, it said. Serviced apartments and retail space have also been built in Shenyang, but UE did not share more details about the activity there.

WBL had a net asset value per share of $2.64 as at Dec 31.

UE's net asset value per share was $3.09 as at Dec 31, up from $3.06 as at Dec 31, 2016.

"The group will enhance its existing commercial properties such as UE Square and UE BizHub West, embark on new property development projects, as well as seize opportunities in other businesses and geographical presence," said executive chairman Zhong Sheng Jian, who is also the founder of Yanlord Land.

UE shares closed unchanged at $2.56 yesterday before the results were released.

A version of this article appeared in the print edition of The Straits Times on February 23, 2018, with the headline 'Profit soars as UE books revaluation gains'. Print Edition | Subscribe