UE E&C: OCBC upgrade to BUY with $0.81 fair value. Note that UE E&C’s share price has rallied strongly since the beginning of the year. YTD, its share price is up a stellar 74% against the STI’s 13%. House met with management recently and are bullish on its medium to long-term prospects.
The group’s strategy of developing its designand- build capabilities and expanding into property development has enabled it to raise/maintain its margins and provide effective cost controls. Going forward, think the mkt will recognize this transformation and re-rate accordingly. Meanwhile, house refined valuation methodology to SOTP (previously PBR) to account for its returns from development projects.
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