Module: MDO001112

Lord Ashcroft International Business School

MOD001112 Business Analysis Project

Module Leader: Robert Jones
Assignment Title: Business Analysis of UOL Group
Limited
SID Number: 1359716/1
Word count: 2,998 (Body text only)

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ABSTRACT
OBJECTIVES OF THE STUDY
5
CHAPTER 1: INTRODUCTION
6
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.

Introduction
Overview of company profile
Company set up
Company business segmentations
Past, present, future strategic view
Competitors profile
Competitors s product / service offered
Competitors overall strategic positions
CHAPTER 2: MARKET ANALYSIS
11

i.
ii.
iii.

Marketing strategies
Marketing plan - global scenario
Marketing segmentations
CHAPTER 3: FINANCIAL REVIEW
15

i.
ii.
iii.
iv.

v.

Financial review
Benchmarking
KPI (Key Performance Indicators)
Results
a. Revenue
b. Return of equity
c. Earnings per share
d. Profitability
e. Operating efficiency
f. Liquidity
g. Financial leverage
h. Innovation
Investment Appraisal Techniques
CHAPTER 4: BUSINESS ENVIRONMENT ANALYSIS
25

i.

Business Environmental Factors

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ii.
iii.

Macro PESTEL
Micro Porters 8 force
CHAPTER 5: SCENARIO ANALYSIS
30

i. Scenarios
ii. Results
CHAPTER 6: FINDINGS
31
CHAPTER 7: CONCLUSION
32
CHAPTER 8: RECOMMENDATION WITH MODEL
33
BIBLIOGRAPHY

34

APPENDIX
37

ABSTRACT
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Business analysis looks at investigating the business operations to uncover

the reasons behind the results achieved, and the repercussions of those
results on the business. UOL Group Limited (UOL) is one of Singapores
leading real estate companies, with a portfolio of development and
investment properties. The companys commitment to quality excellence
and architecture is demonstrated in their development projects which won
prestigious awards such as FIABCI Prix dExcellence Award, Aga Khan Award
for Architecture and Singapore Presidents Design Award (UOL, 2014).
This business analysis report will analyse the company and business
segmentations,

business

environment,

financial

performance

of

the

company and the competitors and business strategy. The findings will be
reported and recommendations presented with a strategic map which can
help UOL enhance their performance and identify weaknesses. References
will also be included at the end of the report.

OBJECTIVES OF THE STUDY

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The goals of the study are to comprehend the different components of

business

analysis

report

and

analyse

the

competitive

and

market

environment of UOL and evaluate the trends and develop potential

improvement in the current real estate industry. Porters 8 Forces and
PESTEL models will be incorporated to analyse the macro and micro
business

environments

and

key

findings

will

be

presented

with

recommendations.
1. CHAPTER 1: INTRODUCTION
i.
Introduction
The local residential and commercial property landscape is getting more
competitive, especially with property cooling measures introduced by
government in the last 2 years. Demand for private residential
properties has dropped. A tighter immigration policy has also affected
the property market with less purchase of properties by foreigners. All
these impacted the industry players in their performance and place
greater future challenges.
ii.

Overview of company profile

One of Singapores leading public-listed property companies, UOL has an
impressive portfolio of development and investment properties, hotels
and serviced suites. Possessing over five decades of track record, UOLs
list of property development projects includes residential units, office
towers and shopping malls, hotels and serviced suites. Its commitment
to quality excellence and architecture is reflected in their developments,
which won prestigious prizes such as the FIABCI Prix dExcellence Award,
Aga Khan Award for Architecture, Urban Land Institute Awards for
Excellence and Presidents Design Award. UOL, through its hotel
subsidiary Pan Pacific Hotels Group Limited (PPHG), owns two reputable
brands namely Pan Pacific and PARKROYAL. PPHG owns/manages more
than 31 hotels in Asia, North America and Oceania with 9,500 rooms in
its portfolio (UOL, 2013).

iii.

Company set up

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UOL

plays

an

active

part

of

Singapores

success

story,

from

independence to its prosperous nation it is today. It has grown with the

countrys progress and involved in shaping the physical landscape
through its 3 business pillars: residential, commercial and hospitality
developments.
UOLs iconic and award-winning residential developments include 1
Moulmein Rise and Newton Suites in the Novena enclave, and Regency
Suites and Twin Regency at Tiong Bahru district. It owns 5 commercial
offices (such as Novena Square, United Square and Odeon Towers) and
two themed shopping malls (Velocity@Novena Square and United
Square) with a net lettable area of 134,782 sqm (UOL, 2013). There are
also 4 serviced suites properties within the group totaling 683 rooms.
Through the subsidiary hotel, Pan Pacific Hotels Group, UOL owns Pan
Pacific and PARKROYAL brands that owns and/or manages over 31
resorts, hotels, serviced suites in Asia, North America and Oceania
UOL revenue is $1.06 billion which was a decrease of 8% from 2012 and
the group earnings per share is $1.02 for the year ended 31 December
2013 (UOL, 2013).
iv.

Company business segmentations

Figure 1 illustrates UOL business segments at a glance. Figure 2 and 3
show the revenue and profit of these segments.

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From the above, Property Development, Property Investments and Hotel

Operations are UOLs key revenue drivers and this is reflected in the
revenue and profit breakdown. The three segments account for 96% of
revenue earned and 89% of profit from operations respectively for 2013.
v.

Past, present, future strategic view

Figure 4 provides details of UOLs strategic views over the last decades.
It can be seen that the company had grown its strength and capability
and expanded regionally.

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vi.

Competitors profiles
Two competitors of UOL namely, City Developments Limited (CDL) and
Ho Bee Land Limited (HBL) will be anaylsed alongside UOL for this
report.

The competitors selected are amongst the top ten developers along with
UOL. CDL leads UOL in size and has a more extensive network of
subsidiaries while HBL has created a niche for itself in the high-end real
estate segment.
vii.

Competitors products comparison

Figure 6 presents a summary of the competitors products compared to
UOL.

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viii. Competitors overall strategic positions

Figure 7 and 8 highlight the overall strategic positions of CDL and HBL.

Being a leader in the industry, CDL has an extensive network of

presence both locally and globally. Figure 8 shows it adopts multiple
growth strategies while HBL adopts focus differentiation for expansion.
2. CHAPTER 2: MARKET ANALYSIS
i.
Marketing Strategies

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Over the decades, UOL has established itself as a key player in the real
estate industry. It focuses on its core strengths such as award winning
architectural designs, niche areas (eg. Thomson and Tiong Bahru vicinities)
and strong association with the United Overseas Bank (UOB). The following
table details the marketing strategies of UOL and its competitors and their
brand value.

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Brand value refers to the brand equity of a company based on

brandirectory literature review of brand finance (Brandirectory, 2014).
Depending on a companys reputation, brand value provides a financial
value of having customers who will pay more for a specific brand. CDLs
brand value is the highest of the 3 companies with USD494 million worth
and a rating of AA-.
ii.

Marketing Plan
Table 5 highlights the marketing plan of UOL based on its core segments. Its
marketing plan focus on its main strengths such as architectural designs for
its residential properties.

iii.

Marketing Segmentations
Following graphs present the revenue gained from UOLs key business
segments with comparison to its competitors.

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Figure 6 highlights UOL declining revenue from property development by

70% from 2011 to 2013 which the other competitors are experiencing
similar trends. Being a stronger player in the industry, CDL experienced
lower percentage of decline of 15% in revenue. The trend was due to the
cooling measures introduced by the government which saw a drop in
property buyers.

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UOLs revenue from property investments grew from 160 million in 2011 to
180 million in 2013 which is also a similar trend for the other competitors.
With more focus on this business segment in the present years and beyond,
we can expect UOL to catch up with CDL.

UOLs revenue from hotel operations grew steadily from $360 million in
2011 to $420 million 2013 but is far lower than that of CDL of $1543 million
which is almost 4 times more. HBL currently does not have this segment of
business. Based on figures 6 8, CDL dominates all business segments and
to catch up with CDL, it has to adopt more aggressive growth strategies.

3. CHAPTER 3: FINANCIAL REVIEW

i.
Financial review
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Financial review is an utmost important function of every successful

company. Under financial review, companys financial performance and
position will be reviewed and assessed on industry benchmarks. UOL key
performance indicators will be assessed with its main competitors CDL and
HBL in this chapter.
ii.

Benchmarking
Benchmarking is the process of assessing services of a company with the
best practices of the market. This section will compare main key
performance indicators (KPIs) of UOL with the selected two competitors,
CDL and HBL. The competitors are selected because of their financial
performance and unique positioning within the industry. From this
benchmarking process, UOL can assess the gaps from the different KPIs in
comparison to its competitors performance so as to develop strategies to
improve them.

iii.

Key Performance Indicators (KPI)

KPIs are performance targets of a company, which use to assess its output.
Figure 14 lists the KPIs of UOL which will be benchmarked.

iv.

Results
a. Revenue

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UOL experiences steeper decline of revenue by 46% from 2011 to 2013,

while the other competitors are facing similar trends, CDL 4% decline
and HBL 58%. This is highly due to the repercussions of the cooling
measures (eg. extra stamp duty) introduced by the government which
saw a drop in property buyers.

b. Return of Equity (ROE)

ROE is an important KPI which most of the major shareholders take into
consideration in investments, whether the company is making sufficient
return on the capital invested.

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Return of Equity (ROE)

0.30
0.25
0.20
HBL

CDL

UOL

0.15
0.10
0.05
2011

2012

2013

UOLs ROE ratio is consistent and it maintains in the range of 12% to

13%, when compared to inconsistent ROEs of 8% to 10% in CDL and
10% to 26% in HBL. In the detail review to HBL financials, it revealed
that the sudden fluctuation in ROE in 2013 is due to fair value gains from
its investment properties. If we exclude the extraordinary gains, HBL
ROE drops to 5%. In conclusion, UOLs ROE could be considered
consistent, less volatile and above the other two competitors in long run.

c. Earnings Per Share

Another key ratio which investors are interested in where a higher
earnings per share will result in a higher share price. Companies with
high earnings typically declare dividends.

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Earnings Per Share (EPS)

1.40
1.20
1.00
0.80
0.60
0.40
0.20
2011

2012
HBL

CDL

2013
UOL

Similar to ROE, where UOL is consistent and less volatile with the highest
EPS for the 3 years under review among these 3 companies. This is an
indication of sustainability of UOLs performance.
d. Profitability Operating Profit Ratio and Net Profit Ratio
These ratios are commonly used by the company management to review
profitability of entities, which is useful in terms of corporate strategic
decisions.

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Operating Profit Ratio (OPR)

0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
2011

2012
HBL

CDL

2013
UOL

UOL OPR (OP margin) is consistent and less volatile than CDL and HBL.
This further proved the effectiveness of the management in maintaining
profitability from the main business segments, even during the economic
slowdown. Although the revenue has decreased 50% for the last 3 years,
UOL has being able to secure its margin which shows tight controls over
the cost and operational structures.

Net Profit Ratio (NPR)

5.00
4.00
3.00
2.00
1.00
2011

2012
HBL

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CDL

2013
UOL

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NPR is the bottom line performance indicator of a company. Similarly

with trends of the above KPIs, UOLs NPR illustrates consistencies in its
profitable performance in contrast to other 2 competitors.
e. Operating efficiency
These ratios explain how efficiently the company converts its fixed
assets to revenue. The higher the turnover, the more efficient the
company is.

Fixed Assets Turnover

0.50
0.40
0.30
0.20
0.10
2011

2012
HBL

CDL

2013
UOL

In efficiency ratios, CDL leads with a very positive fixed assets turnover
ratio in the range of 0.4 compared to UOL and HBL. This reflects how
efficiently CDL converts its fixed assets into sales. This could mean CDL
has better sales and operational strategies to maximise its resources
compared to UOL and HBL.

f. Liquidity
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An important indication of the of short term solvency of the company. If

the companys liquidity position is low, it may face solvency issues
unless tight controls are being set to manage cash flows. The ideal
situation is having a ratio above 1. However, if the ratio is much higher
than 1, it could reflect ineffectiveness in resource utilisation.

Current Ratio
4.00
3.00
2.00
1.00
2011

2012
HBL

CDL

2013
UOL

From above graph, UOL maintains its current ratio in the range of 1 and
2, which considers the best position out of these 3 companies. CDLs
ratios are above 2, which indicates high level of idle assets which could
have been channelled to revenue generation. However, HBL ratio for
2013 is below 1 which indicates a liquidity crisis, which is evident with
the Net Current Liability position at $150 million.

g. Financial Leverage
These ratios reflect the financial position of the company to sustain in
the long run. It is a useful indicator when deciding and assessing
financing strategies of a company.

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Debt Equity Ratio

0.70
0.60
0.50
0.40
0.30
0.20
0.10
2011

2012
HBL

CDL

2013
UOL

From the above ratio comparison, it reveals that CDL is highly leveraging
on debts which is above 0.6 which is not too alarming, however CDL
should look into their financial strategies to reduce the debt by
maximising its current assets.
UOL maintains a low financing leverage by keeping it lower than 0.5
which indicates a better finance strategy. However HBL financial gearing
is really low, which hinder constraints of getting long term financing
options due to its weak financial position. Out of the 3 companies, it
could be concluded that UOL has a better grip in its financing and
liquidity position with a moderate leverage ratio and a current ratio.

h. Innovation
These KPIs reflect how much the companies are spending to innovate
and improve their innovation capabilities and can be measured from
expenses on research and development and human resources. In
2005,
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Green

Mark

Scheme
22

was

launched

by

the

Singapore

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government to promote environmental awareness in the real estate

industry through adoption of Green Building Technologies.

v.

Investment Appraisal Techniques

The companys investment properties grew from S$285.7mn in 2011 to
S$331mn at the end of 2013, solely from fair value gains arising from the
same investment properties, an increase of some 16% over 3 years. The
company engages external, independent and qualified valuers to determine
the fair value of the companys investment properties semi-annually based

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on the properties highest and best use. Figure 24 detailed the various
techniques.

4. CHAPTER 4: ANALYSIS OF BUSINESS ENVIRONMENT

i.

Business environment factors

This chapter analyses the business environment of UOL within the global
real estate industry. PESTEL will be applied to analyse the macro
environment while Porters 8 forces model will be used to assess the micro
environment. The overall analysis will support a scenario-based of UOLs
financial performance in the following three years and recommendations.

ii.

Macro - PESTEL
The PESTEL model categories environmental influences into 6 main types:
economic, political, technological, social, legal and environment. Hence it

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provides a useful list of influences on the possible success and failure of

strategies (Johnson et al., 2011). Figure 12 analysed PESTEL on UOL.

Environmental

influences

affect

the

real

estate

industry

critically

particularly, political, economic, legal and environment aspects. For

example, revenue of UOL and the other industry players were significantly
affected the last two years since the Singapore government introduced
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property cooling measures in 2011 such as increase stamp duty and

restriction in bank financing of buyers. It is hence imperative to be aware
and manage these impacts.
iii.

Micro Porters 8 forces

An industry is a group of firms producing products and services that are
fundamentally the same (Johnson et al., 2011). Porters five forces model
aids identification of the attractiveness of an industry regards to the 5
competitive forces.

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Although Porter developed 5 main forces which provides helpful insights

into for competitive analysis, it has few weaknesses. One relevant
weakness, it is useful for an industry level but not intended to be applied
for an industry sector analysis. Conglomerates such as UOL and CDL will
experience challenges using this framework as different industry have
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different competitive forces (Lever, 2014). Downes and Mui (1998) had
further enhanced the framework with the following three new forces.

Understanding its micro environment is equally vital for UOL as with the
macro environment. Operating in a fiercely competitive real estate industry,
UOL needs to identify strategies to counter or influence the impact of these
forces,

such

as

going

into

joint

ventures

to

co-develop

massive

developments globally to manage competitive rivalry.

5. CHAPTER 5: SCENARIO ANALYSIS
i.
Scenarios
Predictions on scenarios of UOLs financial performance will be developed
based on the analysis in the earlier chapters and UOL annual reports. This
is a process based on developing scenarios and comparing the results, so
as to evaluate the consequence and future developments of society are
anticipated and responded with strategies (Rothman and Alcamo, 2004).
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Two possible financial scenarios will be forecast, the best-case scenario

seeks to improve and motivate the business confidence and moral while the
worst-case provides caution for close monitoring in advance.

ii.

Results
In best-case scenario, UOL is able to increase its already impressive profit
margins even further by some 4% in the next three years. This is based on
the assumption that there is no change in the business structure of UOL.
The worst-case scenario presents the challenges UOL may face should
costs increase at a much faster rate than revenue increases. The worstcase scenario decreases its profit margin by some 4% over 3 years should
UOL persistently face an environment where inflation rate out-paces growth
rate.

Therefore, UOL should keep a tight control over cost and aim to

maintain cost increases below inflation rates.

6. CHAPTER 6: FINDINGS
(market factors, financial model, limitations,
strategies)
The following are some findings resulting from the analysis from chapter 2
to chapter 5.

Market factors such as government regulations have impacted the

performance of the company the last two years.

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In the innovation aspect, UOL has not jumped into the bandwagon of
building green developments but has innovated by having thematic

retail malls.
Current strategy [To be updated]

7. CHAPTER 7: CONCLUSION
UOL has grown to become one of the leading developers in Singapore in the
recent decades. Based on the analysis, it is financially sound and safe for
investment as it had declared dividends to shareholders as a return on
investment annually. But to remain sustainable in this highly competitive
industry, UOL has to seek further growth opportunities.

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8. CHAPTER 8: RECOMMENDATION WITH MODEL

The real estate industry in Singapore is high competitive with not only large
and strong players but also smaller and mid-sized players who are
potentially competitive. Although UOL is one of the top 10 developers in
Singapore, it cannot be complacent and has to establish strategies to
increase its current performance and market share.
Based on Bowmans The Strategy Clock model which analyse a companys
market positioning in terms of pricing and customers perceived benefits of
the products/service, UOL is recommended to move from the zone of hybrid
strategies which it currently adopt to the zone of differentiation strategies
as illustrated in Figure 29 (Johnson et al., 2011).

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With these strategic changes which range from short to long term
strategies and implementation plans, UOL will pave its way to be as strong
as CDL or even bigger in the next few decades.

BIBLIOGRAPHY
Alcamo J., and Rothman D., 2004. Introduction to Scenario Analysis [online]
Available at:
<http://www.usf.uniosnabrueck.de/projects/TIAS/presentations/alcamo_scen
arios.PDF.> [Accessed 31 July 2014]
Brandirectory, 2014. Brand value ranking. [online] Available at:
< http://brandirectory.com/search/?brand=UOL> [Accessed 25 July 2014]
Building and Construction Authority, 2013. BCA Green Mark Scheme
[online] Available at: <http://www.bca.gov.sg/GreenMark/GMIS.html>
[Accessed 5 August 2014]
City Developments Limited, 2013. 50 Golden Years, Annual report 2013.
[online] Available at: <http://media.corporateir.net/media_files/IROL/60/60774/CDL_AR2013.pdf> [Accessed 20 June
2014].
City Developments Limited, 2013. Annual report 2012. [online] Available at:
<http://media.corporateir.net/media_files/IROL/60/60774/Full_Annual_Report_2012.pdf> [Accessed
20 June 2014].
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City Developments Limited, 2013. Annual report 2011. [online] Available at:
<http://media.corporate-ir.net/media_files/irol/60/60774/12_0019%20CDL
%20AR%202011%20(LR)_270412.pdf> [Accessed 20 June 2014].
City Developments Limited, 2013. Annual report 2010. [online] Available at:
<http://media.corporateir.net/Media_Files/IROL/60/60774/CDL_AR2010_FINAL.pdf> [Accessed 20
June 2014].
City Developments Limited, 2013. Annual report 2009. [online] Available at:
<http://media.corporate-ir.net/media_files/irol/60/60774/CDL_AR2009.pdf>
[Accessed 20 June 2014].
Downes & Mui, 1998. e-business strategy competitive forces [online]
Available at: <http://tutor2u.net/ebusiness/ebusiness-strategy-competitiveforces.html> [Accessed 4 August 2014].
Grant, R.M., 2012. Contemporary strategy analysis Text and Cases, 8th ed.
Chichester: John Wiley & Sons.
Ho Bee Land, 2013. The Big Move, Annual report 2013. [online] Available at:
<http://www.hobee.com/images/Ho%20Bee%20Land%20AR%202013.pdf>
[Accessed 20 June 2014].
Ho Bee Land, 2013. Annual report 2012. [online] Available at:
<http://www.hobee.com/images/HO%20BEE%20ANNUAL%20REPORT
%202012%20.pdf> [Accessed 20 June 2014].
Ho Bee Land, 2013. Annual report 2011. [online] Available at:
<http://www.hobee.com/images/stories/investor/annualreports/hbar_2011.p
df> [Accessed 20 June 2014].
Ho Bee Land, 2013. Annual report 2010. [online] Available at:
<http://www.hobee.com/images/stories/investor/annualreports/hbar_2010.p
df> [Accessed 20 June 2014].
Ho Bee Land, 2013. Annual report 2009. [online] Available at:
<http://www.hobee.com/images/stories/investor/annualreports/hbar_2009.p
df > [Accessed 20 June 2014].
Kennon, J., 2014. The five categories of Financial Ratios. Investing for
Beginners. [online] Available at:

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<http://beginnersinvest.about.com/od/financialratio/a/ratiocategories.htm>
[Accessed 5 August 2014]
Johnson et al., 2011. Exploring Strategy: Text & Cases. 9th ed. UK: Prentice
Hall.
Kotler et al., 2013. Principles of Marketing. 6th ed. UK: Prentice Hall.
Lever, R., 2014. Weakness of Porters Five Forces Model. [online] Available
at: <http://suite101.com/article/weakness-of-porters-five-forces-modela86222> [Accessed 31 July]
Monetary Authority of Singapore, 2014. MAS Annual Report 2013/14.
[online] Available at: <http://www.mas.gov.sg/news-andpublications/speeches-and-monetary-policystatements/speeches/2014/mas-annual-report-2013-2014.aspx> [Accessed
5 August 2014]
UOL, 2013. Creating Value Shaping Future, Annual report 2013. [online]
Available at: <http://www.uol.com.sg/attachments/Publication/uol-grouplimited-annual-report-2013.pdf> [Accessed 20 June 2014].
UOL, 2013. Annual report 2012. [online] Available at:
<http://www.uol.com.sg/attachments/Publication/uol_annual_report_2012.p
df> [Accessed 20 June 2014].
UOL, 2013. Annual report 2011. [online] Available at:
<http://www.uol.com.sg/attachments/Publication/uol_ar_2011.pdf >
[Accessed 20 June 2014].
UOL, 2013. Annual report 2010. [online] Available at:
<http://www.uol.com.sg/attachments/Publication/uol-ar2010_2.pdf>
[Accessed 20 June 2014].
UOL, 2013. Annual report 2009. [online] Available at:
<http://www.uol.com.sg/attachments/Publication/uol_ar2009.pdf>
[Accessed 20 June 2014].

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APPENDIX
A) Financial Ratio Formulas
RATIO

FORMULA

MEANING

Return of equity

Earnings per share

Operating profit
rate
Net profit ratio
Fixed assets
turnover
Current ratio
Debt equity ratio

(Source: Kennon J., 2014. Investing for Beginners)

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ANALYSIS

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B) UOL Financial Calculations

(Source: All figures referenced to 2011-2013 Annual Reports of UOL)

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C) CDL Financial Calculations

(Source: All figures referenced to 2011-2013 Annual Reports of CDL)

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D) HBL Financial Calculations

(Source: All figures referenced to 2011-2013 Annual Reports of HBL)

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E) Scenario Analysis
(Best-case scenario of UOL)

(Worst-case scenario of UOL)

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Module: MDO001112

F) The Strategy Clock (Johnson et al., 2011)

Definition: The Strategy Clock provides a way of approaching generic
strategies and is market-focused which looks into prices to customers rather
than costs to organisations.
Differentiat
ion zone

This zone contains a range of feasible strategies for building on

high perceptions of product or service benefits amongst
customers. There are two strategies within the zone:
differentiation without price premium and differentiation with
price premium.

Low-price
zone

This zone allows for different combinations of low prices and

low perceived value.

Hybrid
strategies
zone

This zone involves both lower prices than differentiation

strategies, and higher benefits than low-price strategies. It is
often used for increase in market share or when entering a new
market.

Noncompetitiv
e zone

This zone involves low benefits and high prices and is

considered infeasible economics. Unless businesses have
exceptional strategic lock-in, this usually lead to failure.

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