Thursday, August 14, 2014

UE E&C

UE E&C: 2Q14 earnings are in line with expectations but 1H14 fell short as 1Q14 disappoint. Profits up 9.5% y/y to $21.5m, bumped up by large share of profits from associates and JVs. Revenue grew 6.0% y/y to $111.6m but gross profit declined 17.2% y/y in the absence of write back of provisions. Construction revenue grew 13.4% y/y to $86.2m with final revenue recognition upon TOP of Austville Residences project, building materials and equipment grew 22.7% y/y to $9.5m partially offset by 44.5% decline in M&E Engineering (to $16.5m). Citing BCA forecasts of construction demand, management remains optimistic on its main construction and engineering businesses but expects margin compression due to rising labour costs. UEEC trades at 3.6x annualized 2Q P/E, .7x 1H annualized P/E and 1.3x P/BV.

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