United Global Limited - Phillip Securities 2021-08-12: Lubricated Engines

UNITED GLOBAL LIMITED (SGX:43P)

United Global Limited - Lubricated Engines

United Global (SGX:43P)'s revenue increased from US$83k to US$2.7mn in 1H21, contributed by manufacturing of nano-fibre oil-absorbent materials for JV company and one-off sale of gasoil.
Higher share of JV profits from United Oil Company (UOC), which increased 50% y-o-y to US$3.4mn.

United Global's revenue increased from US$83k to US$2.7mn in 1H21. This was contributed by the manufacturing of nano-fibre oil-absorbent materials for JV company, M-TechX United Pte Ltd, and a one-off sale of gasoil.

Share of JV profits increased 50% to US$3.4mn, contributed by United Oil Company (UOC), its 60:40 JV with Repsol.
UOC’s revenue and profits were US$66.2mn and US$6.6mn, up 94.8% and 71.9% respectively. Its revenue increase came from higher sales volumes and ASPs on the back of a better COVID-19 situation in 1H21.

Gross loss of US$155k was higher than United Global’s S$133k loss in 1H20, by 16.5%.
As revenue improved, cost of sales also surged, from US$216k in 1H20 to US$2.9mn. As nano-fibre oil-absorbent manufacturing operated at low production rates due to slow orders, United Global was unable to generate sufficient revenue to cover non-cash expenses of depreciation of property, plant and equipment.

Through the JV, United Global intends to leverage Repsol’s international brand presence to accelerate the growth and regional expansion of UOC.
Prior to its divestment of a 40% stake in UOC in 2019, United Global derived 90% of its revenue from Asia and about 50% from Southeast Asia. Management is expecting tougher business conditions, particularly with new COVID-19 variants in the region.
Another risk is the price of crude oil, a key ingredient in the blending of lubricants. Freight costs may also escalate, which could dampen United Global’s growth.
See

Vivian Ye Phillip Securities Research | https://www.stocksbnb.com/ 2021-08-12

SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000