UNITED GLOBAL LIMITED (SGX:43P)
United Global Limited - Higher Oil Prices Benefited Group’s Lubricant Business
- United Global (SGX:43P)'s 60%-owned United Oil Company Pte Ltd (UOC) reported a 94.8% rise in revenue to US$66.2 million in 1H2021 boosted by an increase in sales volume and higher average selling price. As a result, gross profit rose 74.9% to US$14.6 million despite registering lower gross margin at 22.1% due to higher raw materials costs.
- Overall, UOC recorded profit of US$6.6 million, 74.9% higher y-o-y. However, UOC’s contributions are equity-accounted. United Global booked its share of US$3.4m in its P&L.
60%-owned lubricant JV continued to be main contributor United Global Group.
- In 1H2021, United Global recognised revenue of US$2.7 million contributed by its nano-fibre oil absorbent manufacturing business and one-off sales of a cargo of gasoil. The Group recorded gross loss of US$0.2 million as its nano-fibre oil absorbent manufacturing business continues to run at sub-optimal capacity. Other income increased by 84.5% to US$1.2 million due to write back of inventories.
- Together with share of UOC’s earnings, United Global's net profit increased by 91.9% to US$3.2 million.
Looking for new business opportunities.
- On top of its lubricant business and its nano-fibre oil absorbent manufacturing business, United Global has identified three new business segments to grow recurring revenue. These are
- logistics or shipping businesses,
- trading of petrol related products and
- materials recycling and sustainability businesses.
- On 26 January 2021, United Global, acquired an indirect 22.05% stake in PT Latitude Inti Mitra Abadi (LIMA) for US$2.0 million. PT LIMA is a logistics company that operates in the Indonesian and Malaysian waters. It owns five sets of tugboats and barges, and one container vessel.
Maintain our call at HOLD.
- While United Global’s lubricant business had continued to perform, its contribution is now limited to the 60% shareholding in UOC Group. As the Group continues to actively look for new opportunities to expand and diversify its business, its strong net cash of ~US$32 million will allow United Global to embark on its growth and expansion plans.
- See
- In the meantime, we maintain our HOLD call at the target price of S$0.445 per United Global share amidst the lack of near-term catalysts.
Lam Wang Kwan
SAC Capital Research
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https://www.saccapital.com.sg/
2021-08-12
SGX Stock
Analyst Report
0.445
SAME
0.445
