United Engineers

Ue FY2010 is out. EPS tripled from 22 cents to 71.7 cents and NTA up to $3.98. Dividend of 11 cents declared. Yield is a reasonable 4.x % based on current price of 2.4.

(01-03-2011, 09:36 PM)LionFlyer Wrote: Dividend of 11 cents declared. Yield is a reasonable 4.x % based on current price of 2.4.

There is a correction done by the company, it has been reduced to 10 cents.

See the following link for more information.

http://info.sgx.com/webcorannc.nsf/Annou...endocument

vested.

I thought they could be more generous with the increase in revenue and earnings. The dividend last year was 9 cents.

WHY UE IS UNDERVALUED?

1. There is about 70 million units of bond that can be converted to UE shares at a discounted price. If I don't remember wrongly, every 1000 bond unit can be converted to 761 UE shares. So any upsurge by UE is likely to face resistance by these bondholders - largely OCBC.

2. Bond issues + diversification of UE (E&C) are viewed as strategic move to enlarge share capital, makeking any hostile takeover to be difficult. As for the past 1 to 2 years, the market had speculated that Tecity - Kuah Geok Choo (the holding company of Straits Trading) is eyeing on United Engineers. Collectively, they had around close to 30% shareholding through WBL, Tecity & the Tan Chin Tuan Foundation. It is another struggle fight between them and OCBC to gain controlling stake of UE. With such divesification, it will make any takeover attempt to be more difficult... Takeover play is therefore discounted.

3. Tan Chin Tuan Foundation are offloading their shares from the $2.70+ level (As announced by SGX as they ceased to become substantial shareholder). Is this a strategic move to bring down the price of UE so that they can launch a takeover for UE...???? It will be anybody guess....

The good new is, with the support of NAV of $3.98 and profit supported by a low P/E of less than 4 times currently, any futher downside is likely to be limited.

UE had unusual price movement being sold down to $2.19 in the closing minutes. Wondering what's up.

I read the latest press release and they noted that "and upon the adoption of INT FRS 115". But I thought the Park Central @ AMK and The Rochester revenue had been booked in the previous quarter? Is the revenue increase just a different way to relooking at the numbers?

If I am not wrong, the booking of revenue of previous quarter has been reversed, which is the reason the revenue and profit figure rose so drastically for Q3.

I need some help to understand the numbers.

I note that property rentals & services recorded an operating profit of $18.7m for 9M11; which annualises to $24.9m. Base on this, and since investment properties are valued at $1,192m, the yield is only just above 2% which is not even half of listed Singapore industrial REIT.

Please help me to understand the numbers correctly if I have made some mistake or omission in my calculations.

Thanks!

(11-11-2011, 10:31 PM)freedom Wrote: If I am not wrong, the booking of revenue of previous quarter has been reversed, which is the reason the revenue and profit figure rose so drastically for Q3.

I also not very sure. It sounds a lot like financial dressing, and the numbers look too good to be true.

Correct me if I am wrong but the FRS 115 accounting method has to be implemented by all property developer. What essentially is the difference is that developer now book revenue on completion method instead of percentage of completion.

It is actually supposed to recognise revenue on a more conservative method. The only issue is that revenue & earnings recognition might be more lumpy now since they can only be recognised once the entire property has been constructed finished.