United Envirotech: +3.4% at $0.46. 2QFYMar11 revenue, net profit doubled yoy to $23m, $6.1m on the back of higher engrg income. Qoq, revenue was flat, but net profit was up 43%.
We note the much higher 209% yoy increase in material purchased, consumables used and subcontractors’ fees at $13.2m, although mgt attributes this to most engrg projects being in the construction and commissioning stages...
Mgt remains optimistic on outlook. Expects growing demand for the membrane based water and wastewater treatment services, due to the strict discharge limits and shortage of water supply in various parts of China. Plans to actively seek suitable TOT/BOT/BOO projects in China via organic growth / M&A, and provide operation and maintenance (O&M) services to further boost its recurring income stream. Beyond China, the Group also intends to explore overseas projects to expand its presence…
Stock trades at 9x fwd PE, similar to peers Sinomem (7.4x), Asia Environment (9.4x), but cheaper than its larger players like Hyflux (22.2x), Sound Global (18.2x). DMG, OCBC have Buy ratings with $0.64, $0.63 targets respectively.
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