Saturday, 11 August 2012

Review of 2Q 2012 Results: United Engineers

United Engineers just released their 2Q results on Friday.
Here are some figures --->

Key numbers (2Q2012 financial statement) 
Number of shares issued (including convertibles): ~321m
Current share price: S$2.32
NAV: S$3.97
Ppty development Operating profit: 0  (1Q also 0)
Rental Operating profit: S$9.5m (1Q  S$14.5m)
Engineering Operating profit: S$6.6m (1Q  S$2.5m)

EPS: $0.025 this quarter

My analysis 
A glaring issue that I noticed was a drop in the Operating profit of recurring Rental income by S$5m QoQ. I was surprised by this as i expected at least an equal amount to 1Q2012.

UE Bizhub East (extracted from website of CPG consultants)

Regular readers should know I watch income from recurring assets like a hawk as I believe strongly in sustainability. The income from this segment is also the basis for my valuation of this company.
Thus, I need to reconcile the reasons for this massive drop.

A likely reason, I speculate, is it could be due to one-off maintenance expenses or staff bonuses.  
For now, I can't be certain.
I'll be watching the performance of this segment in the coming months.
Would like to hear from readers if they have any views on the possible reasons for this drop, though?

 Meanwhile, the list of recurring income assets for this company that I gathered is as follows:
1) UE Square + Park Avenue Suites
2) UE Bizhub Central
3) Park Rochester Hotel
4) Rochester Mall
5) UE Bizhub East  (Obtained TOP in 2Q2012, no significant contribution yet)

Overall, the catalysts for growth as explained in my 26th July post on UE are still intact.

Stock investing is never easy though, always having to make decisions with incomplete information~! Guess thats why they say it is part art, part science!

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