Friday, July 19, 2013

Uni-Asia Holdings : A better FY13 (UOBKH)

Uni-Asia Holdings
Share Price S$0.205
A better FY13
Uni-Asia Holdings
Share Price S$0.205
A better FY13

Valuation
• Uni-Asia Holdings (Uni) is trading at 10.8x FY13F PE vs peers’ average of 10.4x.

Investment Highlights
• A shipping sector recovery - slowly but surely. The shipping sector has been in a slump since 2009 due to a supply glut. While outlook for the shipping industry remains mixed as the supply overhang continues, it is worth noting that all of Uni’s vessels are Handysize bulkers (< 40,000dwt). According to Pacific Basin, there was zero net fleet growth among global Handysize bulkers in 1Q13 as new supply was fully offset by those that were scrapped. With current global orderbook for Handysize bulkers at 17% of existing fleet vs 20% for existing Handysize bulkers that are over 25 years old (which may be scrapped soon) as at 1 Apr 13, the supply-demand situation for the Handysize bulkers seems to be looking a bit brighter. In a shipping sector recovery, we believe Handysize bulkers will be the first to pick up.


• Recurring income to gain momentum. In FY12, Uni generated a pre-tax profit of US$3.3m from its three vessels. Given two vessels to be added to its portfolio by 2QFY13, we expect recurring income from Uni’s chartering business to increase by more than 40% in FY13. Uni will be receiving another three Handysize bulkers between 2014 and 2016.

• A better 2013. Besides contributions from ship chartering, property development projects in Japan and Hong Kong are expected to boost Uni’s earnings for FY13. Uni has a 10.2% interest in an office building redevelopment project in Kowloon East, Hong Kong. Expected to be completed by end-13, Uni could recognise US$1m-2m of profit from this project. Uni will also be selling four small residential projects in Tokyo, Japan, which are expected to be completed by end-13. Hotel operations, which had been a drag on past years’ performances, have also seen an improvement, with management guiding the segment to achieve a breakeven in FY13.

Our View
• While the outlook for the shipping sector remains mixed, we believe the worst is over for Uni. With the Baltic Dry Index trading near a 5- year low, Uni has been capitalising on the bargain prices of vessels, growing its fleet to generate a recurring source of income. Its steep discount to NAV (P/B: 0.6x) also provides a huge margin of safety for value investors.


Source/Extract/Excerpts/来源/转贴/摘录: UOB Kay Hian research
Publish date:19/07/13

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