United Engineers

United Engineers

Postby winston » Tue May 13, 2008 2:56 pm

United Engineers (S$3.91) - 1QFY08 results - Hit by one-offs; core numbers in line Core numbers in line. Core net profit of S$12.1m forms only 9% our full-year forecast and 11% of consensus. However, the numbers are within our expectations as we had anticipated lower profit recognition from The Rochester (95% sold at ASPs of S$1,350psf), which is still in the foundation phase.

Barring delays, management has guided that 30% of presale profits from this project will be recognised in FY08. This is in line with our expectations. We expect the project to yield over S$210m in pretax profits. Hit by one-offs but operating figures continued to improve. Headline earnings in 1Q08 were hit by fair-value losses of S$2.9m from short-term investments (Yongnam shares) and an S$8m carrying-value write-down relating to the disposal of a non-core asset (Anhui Hefei United Power).

Stripping these out, revenue grew 9% yoy to S$133.6m despite marginal recognition of The Rochester. Gross margins improved by 2.2% pts yoy to 21.4% on higher rental rates from UE Square. Net gearing of 0.7x was moderately high but is expected to improve to 0.5x in 2009 once profits from The Rochester come on stream.

Construction order book maintained at S$1bn; Centric its next major project. UE maintains a rolling order book of S$1.1bn. Given the demand for construction work in Singapore, the order-book uptrend should be sustainable for the next 2-3 years. UE also continues to be a key proxy for emerging hubs in Singapore. Centric, a business hub project at the Changi Business Park due for completion in 2011, will be developed by the group. While details are still sketchy, its gross development value is expected to be in the region of S$280m-300m. We have not incorporated this in our model.

Continues to offer value. We have reduced our FY08-10 earnings estimates by 5-9% to factor in lower contributions from associates. Our end-CY08 RNAV has been trimmed by 2% from S$6.04 to S$5.94 to factor in an estimated loss of S$30m from the disposal of its non-core asset. Our target price, still pegged at a 20% discount to RNAV, is consequently lowered to S$4.75 from S$4.84. The possibility of monetising UE Square remains a nearterm catalyst for the stock while further clarity on the development of Centric at Changi Business Hub leaves scope for valuation expansion. Maintain Outperform.
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UEM - Analyst - DBS

Postby ishak » Thu Jul 31, 2008 1:41 pm

BUY S$3.19 STI : 2,925.50
Price Target : 12-Month S$ 4.35 (Prev S$4.52)
Reason for Report : 2Q08 Results
Potential Catalyst: Higher than expected ASP for new launches, divestment of assets

Disappointing 2Q
Story: UE reported another set of interim results that came in below expectations. 2Q08 sales declined 4% y-o-y to S$140.2m while net profit slumped 50% y-o-y to S$7.5m.

Point: The weak 2Q performance came on the back of lower contributions from their E&C division, and lower than expected profit recognition from The Rochester, which we understand is due to some delays in its construction. However, these effects were partially offset by continued upward rental reversions on the group’s investment properties. Amid a stronger Singapore dollar vs the USD, the group wrote-down a further S$2.1m from the carrying value of its stake in Anhui Hefei United Power Generation Co (AHUP), and recorded a S$2.7m translation loss, resulting in an almost 5x jump in other expenses to S$7.8m. The absence of large fair value gains and divestment gains which were seen in 2Q07, led to a 85% y-o-y decline in other income to S$1.7m.

Relevance: We have adjusted our FY08 and FY09 earnings forecasts downwards to S$34.1m and $87.5m respectively as we push back profit recognition from The Rochester as well as higher construction costs. Our target price has also been lowered to S$4.35, based on 20% discount to its RNAV of S$5.44.
Despite a weak performance YTD, we remain cautiously optimistic on UE’s outlook going forward as the group streamlines its business model. Earnings will continue to be underpinned by its property activities, with the construction of The Rochester gathering pace, coupled with the group’s launch of its Ang Mo Kio St 52 development last week. Meanwhile, potential divestment of its industrial assets would allow further value unlocking, as well as lightening its balance sheet. Maintain BUY.
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UEM - Analyst - CIMB

Postby ishak » Thu Jul 31, 2008 1:45 pm

• Below. 1H08 core net profit of S$25.1m formed only 21% our full-year forecast and consensus, due to the lack of profit recognition of The Rochester, which we earlier expected this quarter. As foundation work has started, management guides that bookings for this project should materialise in 2H08.

• Good operating numbers. Gross profit for 2Q08 rose 29% yoy to S$7.5m. Gross profit margins improved to 23.4% from 17.4% in 2Q07, due to better performances from the construction and facility management divisions. Stripping out non-core income and expenses, 1H08 operating profit rose 3.3x yoy to S$13.5m.

• ASPs set for Park Central below expectations. UE recently set its pricing for Park Central @ AMK, a public housing project it acquired for S$212m last November, at S$490-500psf on average, 10% below our expectations. We initially expected the project to contribute S$47m in net profit. With the newly set ASP, our profit contribution has been cut to S$19m, implying a marginal 6-7% net margin. Elsewhere, sales of Sui Generis have been progressing nicely. We understand that the project has been marketed overseas and estimate that over 34% has been sold for S$2,410psf on average. This figure is 5% above our expectations and is positive given that similar projects in the area are only fetching S$1,800-2,200psf.

• Forecasts adjusted, target price trimmed but maintain Outperform on longterm value of its asset base. We have cut our FY08-09 earnings estimates by 25-33% but raised our FY10 numbers by 16% as we push back contributions from the Rochester to factor in potential construction delays. We also lower our ASP assumptions for the AMK housing project and apply a lower earnings multiple of 6x (from 10x) to UE’s construction business. This is in line with the current trading range of other Singapore-listed construction companies. Consequently, our end-CY08 RNAV estimate is reduced from S$5.94 to S$5.46. Our target price, still set at a 20% discount to RNAV, drops to S$4.37 from S$4.75. The stock is trading at 0.8x P/BV and a 40% discount to our RNAV. While near-term catalysts are limited, UE’s sizeable asset base continues to offer good long-term value, especially at current share-price levels. Maintain Outperform.
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Re: United Engineers

Postby winston » Thu Sep 11, 2008 10:41 am

Not vested.

DBS Research is downgrading United Engineers to Hold from Buy; target price reduced to S$2.48 (Prev S$4.35). We
continue to believe that the high-end residential segment (ASP of S$2,500psf and above) will continue to face headwinds, as
sentiment for this segment continues to stiffen in the face of a deteriorating global economic outlook.
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Re: United Engineers

Postby millionairemind » Wed Dec 31, 2008 8:34 am

Published December 31, 2008

United Engineers plans $136.5m convertible bond rights issue
Separate US$85.6m deal to dispose of stake in subsidiary falls through

By TEH SHI NING

UNITED Engineers (UE) has proposed a rights issue of up to $136.5 million worth of convertible bonds.

The renounceable, underwritten rights issue, which is expected to raise net proceeds of up to $131.7 million, will be on the basis of three convertible bonds at the principal amount of $1 each for every five shares held at the books closure date.

UE said that it believes a rights issue is the most appropriate way of fund raising given the current market conditions.

The bonds, due 2014, will yield fixed interest of one per cent per annum.

They are convertible into UE shares before maturity at an exercise price to be fixed - based on a 20 per cent premium to the relevant prevailing market price - but subject to a minimum of $1.27 and a maximum of $1.80.

OCBC Bank has been appointed the manager and underwriter of this rights issue, which is subject to shareholder approval at an extraordinary general meeting (EGM).

UE said that it has received in-principle approval from the Singapore Exchange for the listing of the proposed convertible bonds and conversion stock units.

OCBC Bank and Great Eastern Holdings Limited, which together hold about 20 per cent of UE's total issued share capital, have irrevocably undertaken to ensure that relevant subsidiaries subscribe for their entitlements and vote in favour of the proposed issue at the EGM.

The company intends to use the expected net proceeds as general working capital, or to make strategic investments and acquisitions.

'Proceeds from the rights issue will enable the company to strengthen its balance sheet. This will allow the company to invest in value-creating opportunities that are present in these tight-credit market conditions,' said Jackson Yap, UE group managing director and CEO.

Yesterday, UE also announced that its deal with Xin Gang Power Investments, via wholly owned subsidiary United Infrastructure (UI), has fallen through due to Xin Gang's failure to make payment of the balance purchase consideration.

Under the terms of a conditional share sale and purchase agreement, UI was to sell 71.69 million shares in United Power Corporation (Singapore), or 67 per cent of UPC's capital, to Xin Gang for US$85.6 million. Xin Gang already held a 33 per cent stake in UPC.

UE's share price closed unchanged at $1.18 yesterday.
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Re: United Engineers

Postby LenaHuat » Sun Feb 01, 2009 6:19 pm

2day's Zaobao featured an interview with UE's CEO.
Please be forewarned that you are reading a post by an otiose housewife. ImageImage**Image**Image@@ImageImageImage
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Re: United Engineers

Postby winston » Thu Jan 07, 2010 8:40 am

Not vested. From CIMB:-

United Engineers (S$1.87) - Share price reflects worst of devaluations

Maintain Outperform; value laggard still trading substantially below RNAV and book. UE trades at a distressed 0.5x P/BV, supported by balance-sheet de-gearing.

With the share prices of commercial landlords under our coverage starting to rally, UE remains one of the last value laggards still trading substantially below RNAV. We adjust our end-FY09-11 core EPS estimates by -1% to +55% on modifications to our recognition schedule. We raise our RNAV estimate from S$2.63 to S$2.83 on less bearish assumptions for UE Square and Centric.

Our target price rises from S$2.15 to S$2.83 as we remove our previous valuation discount of 20%, since the worst of asset devaluations is likely behind us. Our target price reflects a blended capital value of S$1,050psf for UE Square, which we believe is still conservative.
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Re: United Engineers

Postby ichew » Sat Feb 20, 2010 2:27 pm

from 3Q09

num of sh = 315.408m
NAV = $3.42

investment ppty = $683.489m
devlpt ppty = $211.652m
ppty held for sale = $238.039m
=> abt $3.59 per sh

cash = $312.723m
=> $0.99 cash per sh

equity = 851.427m
debt = $370.49m + 394.688m = 765.178m
=> $2.43 per sh
=> d/e = 0.89

my_nta = ppty + cash - debt = $2.15
lastdone = $1.90
FY09 results out nxt wk
div estimated = 1st & final $0.05 + special $0.03

========================

Major Properties Held By The Group (see AR08 pg 125)
Valued at $1,245.5m (abt $3.95 per sh )

AREIT paid $116m for DBS Asia Hub.
(Colliers valued at $118m. JLL valued at $115m)

DBS Asia Hub is a 9-storey business park building with a basement carpark. It sits on a land area of 18,342 sqm with a gross floor area of 38,744 sqm. The land lease tenure is 30 + 30 years with effect from October 2007.
gfa = 10.763 x 38,744 = 417k sf

UE Biz Hub, which is MUCH nearer to expo mrt, cost valuation as at 31-dec-08 is 85.9m.
tenure = 30 + 30 from 1-feb-08
land area = 468k sf office; 80k sf hotel (260 rooms); 140.214k sf onvention center
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Re: United Engineers

Postby qxing78 » Sun Feb 21, 2010 12:40 am

I wonder the earnings and NAV dilution effects due to the convertible bonds at the end of period.
Becos the ratio is 3 CB for every 5 shares.
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Re: United Engineers

Postby millionairemind » Thu Feb 25, 2010 8:44 am

Published February 25, 2010

United Engineers posts net profit of $52m

By UMA SHANKARI

CONSTRUCTION and property group United Engineers yesterday reported a net profit of $52.2 million for 2009, a significant jump from $6.0 million in 2008.

The main boost for the net profit came from a $32.7m fall in 'other expenses' to $17.7m.

The company's revenue rose 13 per cent to $703.7 million in 2009, from $624.6 million in 2008, mainly due to the progressive recognition of revenue from residential development projects The Rochester in one-north and Park Central @ AMK in Ang Mo Kio, as well as an engineering project for the Marina Bay Sands integrated resort.

Gross profit rose 12 per cent to $162.0 million in 2009 as revenue increased.

The bottom line was also boosted by a $6 million increase in 'other income' to $10.6 million, mainly due to fair value gains from the group's short-term investments. It also recognised a surplus of $745,000 on the revaluation of investment properties, compared with a deficit of $570,000 in 2008.

Earnings per share was 22.1 cents compared with 2.7 cents in 2008.

But the main boost for the net profit came from a $32.7 million fall in 'other expenses' to $17.7 million mainly due to 2008's provisions for the Fusionopolis project, a $9.3 million impairment charge on available-for-sale investments and $6.9 million fair value losses on short-term investments.

The group had cash and cash equivalents of some $308 million as at end-December 2009.

United Engineers said that it will continue to execute several large-scale building and infrastructure projects over the next 12 months.

But while existing projects will keep the company busy, it 'will face stiffer competition in replenishing its order books due to the challenging environment brought about by the economic slowdown in Singapore and the countries it operates in', United Engineers said.

The company's stock gained 4 cents, or 2.1 per cent, to close at $1.99 yesterday.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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