Union Gas runs a vertically integrated operating model, from procurement to bottling, storage, and retailing. With better operational control, the company is actively going after new growth among industrial and commercial customers, as a counter to dipping sales seen in the household market as more home users use alternatives such as piped gas and electricity induction stoves.
DBS Group Research’s Ho Pei Hwa has initiated coverage on Union Gas Holdings on Dec 5 with a “hold” call and target price of 48 cents. While the company is actively growing new markets, it faces near-term cost pressures. Year to date, Union Gas has dropped by nearly 41% to close at 48 cents on Dec 7, valuing the company at $151 million.
With more than 40 years of operating history, Union Gas is a leading distributor of bottled liquefied petroleum gas (LPG) in Singapore. Its sale of LPG constituted 83% of its FY2021 revenue, with customers ranging from individual households to commercial and industrial users such as coffee shops, hawkers, factories and hotels.
