Bangkok--Nov 24--Unimit Engineering
UEC is confident that it will post a higher than its IPO price when its share is traded on 25 November, 2005 due to:
- Funds will invest in UEC share due to its robust performance with a 100% net profit after tax increase for the nine months to 30 September, 2005, compared to the nine months to 30 September, 2004
- Expecting good performance in Q4 and good dividend payment
- Brokers rate the stock “A Buy”
Phaibul Chalermsaphayakorn, Chairman of Unimit Engineering Plc (UEC), said during the first 9 months of 2005, the company posted a revenue of 882 million baht, up by 45% compared to the same period last year, while the net profit totaled 118 million baht, an increase of 100% compared to the same period of last year.,. Such performance attributed to the continuous revenue growth as well as the effective cost control. As for the remaining fourth quarter of the financial year, the company is confident that it will continue to maintain this upward trend
For the next three years from 2006, the company is projecting a revenue growth of at least 15% per year At the moment, the company has submitted bids worth over 10,000 million baht in total. ,. Based on past record, the company is expected to be awarded contract worth no less than 15% of this total bidding sum. The company has already completed the expansion facilities to accommodate such increasing work load. Thus, the company is confident that it will achieve its projected revenue growth as well as to maintain its profit margin. In addition, for the financial year ended 31 December, 2006 and thereafter, it will only required to pay 20% corporate income tax, being a company listed in MAI., compared to a corporate income tax of 30% for the previous year.
In addition, the company has a very healthy cash flow amounted to almost 500 million baht or 3.50 baht per share. And as its e current debt/capital ratio is only 0.2 time, the company is confident that it will be able to pay a good dividend payment to its shareholders. From its 3 years’ past record, the company had paid made a minimum dividend payment of 70%. In other words, shareholders may expect to receive a dividend payment of about 7-8% of the IPO price out of the company’s performance for its financial year ended 31 December, 2005. However, dividend payment is subjected to the decision of the Board of Directors and shareholders’ approval as well as cash investment as required for future projects. .
“I am confident that UEC is a good company with strong fundamental r.
Taking into consideration of the future revenue growth and future earning prospect, I am confident that UEC shares will be traded above its IPO price and provide good investment return to its investors”, said Phaibul.
“I am confident that UEC share will be one of the most outstanding shares in mai, due to its highest market capitalization in mai. The company’s capitalization is about 1,160 million baht. The Company expects to attract the interest of both institute and retail investors” Phaibul said.
Patchaporn Sankaburanurak, Assistant Vice President - Investment Banking, KGI Securities (Thailand) Plc, as the financial advisor and lead underwriter said, the PE ratio of the IPO price is about 7 times of the net profit of 2004. If the performance in 2005 is in line with the projection, the PE
ratio would be lower than 6 times. As for the dividend payment for the performance during 2005 , it is forecasted at around 7-8% of the IPO price whereas the book value is very low at 1.1 times. So, UEC shares price is considered rather cheap and low risk regardless of any method of assessment or calculation. UEC share price is believed to be higher than its IPO price with its highest market capitalization in MAI so it also has the highest liquidation and profit in MAI. At the same time, only 30% of the IPO shares had been allocated to the institute investors which still could not meet the demand. So, they would make further investment after trading in MAI.
From the brokerage analysis, the IPO price of UEC shares is still lower than the target price in the range of 10-13 baht. KGI’s analysts determined the target price at 12 baht resulting in 50% difference in the return margin from the IPO shares. Whereas the analysts of other co-underwriters such as Seamico Securities, Syrus, Bua Luang and Intel Vision, etc., set the target price at 10 baht, 10.5 baht, 12.9 baht and 13 baht respectively.
Unimit Engineering Public Company Limited was founded by a team of Thai investors and Taiwanese engineers on 21 April 1982 with the registered capital of 9 million baht. It was the first company in Thailand to design and produce LPG pressure vessel on OEM basis. The Company’s products can be divided into 5 groups, namely pressure vessel, machinery parts, steel structure, chemical tank and mechanical installation.
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