UE E&C

Did not see any threads on UE E&C so thought I create one.

Advantages:

Consistent High net cash,
YOY +ve FCF,
good yield of 7%,
below book value,
pe of 4,
high ROE.
Diversified business scope.
Other companies in the same industry with similar mkt cap do not have the same strong fundamentals.

Disadvantages:

Govt implementing cooling measures on property.
Below but close to book value.




I myself have purchased 20lots at 70cents.
My views may therefore be biased.

Would like to hear from others about what they think about this company. Is it a good buy?

Edit: Pls do homework before buying/selling.

I am a value investor this stock is in my portfolio. The low pe and good dividend yield are favorable factors. There is another angle too as company is subsidiary of UE and there may be a restructuring plan involving UE (driven by ocbc?). Check this out.

I’ve looked at this counter before. Held it for a while before selling. From a valuation perspective, it does look cheap. The reason why I did not hold them long-term is because of two main risks: the property cooling measures, and the increased foreign worker levies. I find it difficult to quantify the effects of these two risks.

In addition, further points for consideration would be:

1. Not much revenue growth
If you look at the revenue growth over the years, it has been quite stagnant. (348m in 2008 vs 387m in 2012)

2. Profit has declined year-on-year
If UE E&C is an attractive buy now, it should be even more attractive last year given the better operating results and property cooling measures that have yet to kick in. But if you look at the share price history, right after the dividend payout, the price has plummeted from $0.70 to approximately $0.50, and took an entire year to recover to its current $0.70, regardless of its sound fundamentals.

I agree with you that UE E&C does look cheap. Unfortunately, there doesn’t seem to be any hard catalysts that can unlock its value. Of course, you can always make the argument that its value is its own catalyst, but in the face of the property cooling measures and increased foreign worker levies, it seems that any material upside is likely to take a while(maybe a few years?). Thus, I would rather hunt for something with more clearly identifiable catalysts.

I don't know much about the restructuring plan involving UE. Would appreciate it if you can shed more light on this issue.

Slowly creeping up!

Hi Qwerty,
I replied earlier but do not know why it wasn't posted. I have read some where, OCBC owns 30%+ of UE and UE controls about 70% UE e/c. OCBC is keen to divest non-core assets, hence the restructuring move may be in the offing. Your analysis is concise and well thought out. Low payout ratio and good order books are other reasons why I am still invested. Regards,

1H results around the corner. Share price is ascending. Hopefully a positive report. Current payout ratio of 28% is low and hopefully this can be raised. Next catalyst is the launching of Punggol EC.