United Envirotech

United Envirotech: FY14 results came below street estimates, as net profit slumped 32% to $20.1m, mainly weighed by higher operation and maintenance costs of new treatment plants, minimal contributions from engineering contracts, higher financing costs from additional projects and FX loss from the USD/Rmb strengthening. Meanwhile, revenue improved 9% to $202.3m, primarily attributed to strong growth in recurring water treatment segment (+54%), on the back of increased capacity in current and newly acquired plants, partially offset by lower contribution from its engineering segment. With the growing demand for membrane-based water and wastewater treatment services in China, the group expects its recently completed acquisition of Memstar Technology to enhance its capabilities in being an integrated water treatment solutions provider, to expand its stable and recurring treatment income. Management declared first and final DPS of 0.3¢ (FY13: 0.5¢). At $1.27, United Envirotech trades at 2.4x P/B.