United Envirotech : Downgrade to HOLD
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United Envirotech Ltd (UEL) posted a disappointing end to FY14, with net profit falling 31.9% to S$20.1m, and only met 58.2% of our FY14 estimate. Going forward, management continues to maintain a pretty positive outlook for the water industry in China. UEL’s EPC order book of S$230m will also be largely completed in FY15; it is still on the lookout for more waste water treatment plants to add to its portfolio. As we believe that things will improve in FY15 – we bump up our revenue forecast by 7.5%; while we expect core earnings to double to S$41.9m, it is still 13% lower than our previous estimate. However, the recent interest in water treatment plays warrants a higher 28x peg (versus 20x before), and our fair value only eases to S$1.30 (from S$1.36). As the stock looks fairly priced, we downgrade our call to HOLD.Source : -
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