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 1H21 Results - The Positives
Revenue and PATMI growth.
- 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.
Higher share of JV profits.
- 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.
United Global's 1H21 Results - The Negative
Gross loss.
- 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.
Outlook
Lubricant business.
- 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
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https://www.stocksbnb.com/
2021-08-12
SGX Stock
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