SINGAPORE (Aug 15): NRA Capital is keeping its “overweight” call on once-beleaguered Uni-Asia Group with an unchanged fair value estimate of $1.86.
“We continue to like Uni-Asia for its turnaround story, especially with the stabilization of the dry bulk sector,” says NRA analyst Liu Jinshu in a Tuesday report.
The Baltic Dry Index (BDIY) improved to 1,138 as of Aug 15, recovering from 901 as at end June. Uni-Asia’s net profit from this business grew to US$1.6 million ($2.2 million) in 2Q17, from US$1.4 million in the preceding quarter, despite total revenue coming in flat q-o-q.
“We expect Uni-Asia Shipping’s revenue to grow progressively as charters get renewed at higher rates,” Liu says.
Uni-Asia’s earnings nearly trebled to US$2.7 million in 2Q, largely due to arrangement and agency fee income, which surged by to US$1.9 million during the quarter, compared to US$0.7 million a year ago.
Consequently, total fee income close to doubled to US$2.7 million in 2Q17, from US$1.4 million a year ago.
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Uni-Asia in 2Q17 also realised a gain of US$2.1 million in fair value gain from the group’s second Hong Kong commercial office property investment.
“Pre-sales of the office units was encouraging and construction is on schedule,” says Liu. “Uni-Asia expects to exit this investment in early 2018, suggesting that we are likely to see sustained gains from this investment in the rest of 2017.”
Meanwhile, Liu notes that Uni-Asia has invested in a third office building project to be completed by 2019, which should help to sustain earnings from this revenue stream.
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NRA has revised Uni-Asia’s PATMI forecast for FY17F to US$7.7 million, from US$6.7 million previously, on the back of its strong 1H performance.
Its valuation remains pegged to 0.5x of FY17F book value. However, offset by the appreciation of the SGD against the USD, Uni-Asia’s fair value estimate remains unchanged.
As at 3.25pm, shares of Uni-Asia are trading flat at $1.36.
