UE E&C

Kim Eng on 27 Feb 2012

The share price of UE E&C, the engineering and construction subsidiary of United Engineers, surged by as much as 22.2% this morning after the company released its FY11 results last Friday. It reported a net profit of $64.5m, which was significantly higher than the $38.1m the market had expected, based on consensus data from Bloomberg, and 130% higher than the previous year. Its revenue grew by 5.6% YoY from $351.1m in 2010 to $370.8m in 2011 due to higher revenue from all segments but mainly from construction work done in UE BizHub EAST and Ascentia Sky in Singapore. Although the revenue increase was marginal, its profitability was boosted by a leap in gross margins from 16.8% in 2010 to 23.3% in 2011, mainly attributable to lower material prices and improved productivity. UE E&C’s latest book value is $0.61. Its current share price of $0.52 implies a 15% discount to its book. Balance-sheet-wise, the company is sitting on net cash of $112.9m, or $0.42 per share. UE E&C has also declared a dividend per share of 6 cents, translating to an attractive dividend yield of 11.5%. Over the next three days, we will see the last batch of results for this reporting season.