SINGAPORE (Oct 17): SAC Advisors is maintaining its “buy” call on United Global (UTG) with a higher target price of 50 cents from 37 cents previously given the group’s “stellar” 1H17 results.
See: United Global posts 33.7% increase in 1H earnings to US$3.6 mil
1H17 saw a 33.7% increase in earnings to US$3.64 million ($4.97 million) from US$2.72 million the previous year.
Despite a 13.1% drop in volume, the group still reported an 8.3% increase in revenue, which was 2.8% ahead of the research house’s estimates. Gross margins also surged to 17.2%.
In a Tuesday report, analyst Terence Chua says, “The strong outperformance also means that UTG’s earnings came in at 56.7% of our full year estimate.”
In July, UTG acquired a 95% stake in PT Pacific Lubritama Indonesia (PLI). Analysts believe this will lift earnings and overall margins in 2H17.
See: United Global started on ‘buy’ by SAC
Following the acquisition, the group’s blending capacity tripled to 124,00 MT, while it adds 17,000 MT storage tanks capacity and jetty access to 12,000 MT ocean tanker capacity.
“Our new target price implies a 40.8% upside to the current price, as we lift our FY17 and FY18 earnings forecast by 33% and 43%, respectively,” says Chua.
As at 2.52pm, shares in UTG are trading 1 cent higher at 36 cents or 9.2 times FY17 earnings, with 3.7% dividend yield.
