United Envirotech Limited (UEL) reported 2QFY13 revenue +114% YoY to S$53.9m, while net profit doubled to S$8.1m, as it undertook more projects over the quarter. For 1HFY13, revenue grew 87% to S$86.0m, meeting 72% of our full-year forecast, while net profit jumped 93% to S$14.0m, or 78% of our FY13 estimate. In light of the much better-than-expected performance, we are raising our FY13 forecasts by 20-30%. Going forward, UEL continues to remain bullish on the water and waste-water treatment market in China; and will continue to be on the lookout for more viable water projects. We believe that UEL remains in a relatively strong financial position to do so. Maintain BUY with an improved fair value of S$0.67, based on 12.5x blended FY13/FY14 EPS, versus S$0.50 previously.
Strong run again in 2QFY13
United Envirotech Limited (UEL) reported 2QFY13 revenue +114% YoY to S$53.9m, and +68% QoQ, as it undertook more projects over the quarter. Net profit also more than doubled to S$8.1m, and was also up 37% QoQ. For 1HFY13, revenue grew 87% to S$86.0m, meeting 72% of our full-year forecast, while net profit jumped 93% to S$14.0m, or 78% of our FY13 estimate.
Both segments showed healthy growth
By segments, Engineering jumped 125.5% YoY and 73.9% QoQ to S$44.0m, again largely due to EPC work to upgrade the Liaoyang TOT project (60% of the RMB104m contract value was recognised in 2QFY13). Treatment revenue rose 73.7% YoY and 45.6% QoQ to S$9.9m – recall that UEL had earlier added several operating TOT projects in Shandong to its portfolio over the past few months.
Expects growth trend to continue in 2HFY13
Going forward, UEL continues to remain bullish on the water and waste-water treatment market in China, where it believes that the demand for membrane-based services will continue to grow. Upgrading of old water treatment plants also holds great promise, and UEL has embarked on several of its existing plants. Management also aims to maintain its growth trend in 2HFY13.
Funding position remains adequate
Meanwhile, management remains on the lookout for more viable water projects to add to its portfolio, likely in Shandong, Jiangsu and Liaoning. We believe that UEL remains in a relatively strong financial position to do so. With a cash balance of S$70.1m as of end-Sep, we estimate that UEL can finance up to S$175m worth of projects (based on its usual 40/60 equity-debt split).
Raising estimates by 20-30%
In light of the much better-than-expected performance, we are raising our FY13 forecasts by 20-30%. Our fair value also rises from S$0.50 to S$0.67 (now based on 12.5x blended FY13/FY14 EPS versus 13.5x FY13 previously). Maintain BUY.
United Envirotech Limited (UEL) reported 2QFY13 revenue +114% YoY to S$53.9m, and +68% QoQ, as it undertook more projects over the quarter. Net profit also more than doubled to S$8.1m, and was also up 37% QoQ. For 1HFY13, revenue grew 87% to S$86.0m, meeting 72% of our full-year forecast, while net profit jumped 93% to S$14.0m, or 78% of our FY13 estimate.
Both segments showed healthy growth
By segments, Engineering jumped 125.5% YoY and 73.9% QoQ to S$44.0m, again largely due to EPC work to upgrade the Liaoyang TOT project (60% of the RMB104m contract value was recognised in 2QFY13). Treatment revenue rose 73.7% YoY and 45.6% QoQ to S$9.9m – recall that UEL had earlier added several operating TOT projects in Shandong to its portfolio over the past few months.
Expects growth trend to continue in 2HFY13
Going forward, UEL continues to remain bullish on the water and waste-water treatment market in China, where it believes that the demand for membrane-based services will continue to grow. Upgrading of old water treatment plants also holds great promise, and UEL has embarked on several of its existing plants. Management also aims to maintain its growth trend in 2HFY13.
Funding position remains adequate
Meanwhile, management remains on the lookout for more viable water projects to add to its portfolio, likely in Shandong, Jiangsu and Liaoning. We believe that UEL remains in a relatively strong financial position to do so. With a cash balance of S$70.1m as of end-Sep, we estimate that UEL can finance up to S$175m worth of projects (based on its usual 40/60 equity-debt split).
Raising estimates by 20-30%
In light of the much better-than-expected performance, we are raising our FY13 forecasts by 20-30%. Our fair value also rises from S$0.50 to S$0.67 (now based on 12.5x blended FY13/FY14 EPS versus 13.5x FY13 previously). Maintain BUY.
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