United Engineers made significant changes to its asset base in 2013 that included: 1) the divestment of business park UE BizHub East; 2) the acquisition of freehold office/industrial 450, 452 Alexandra Road; and 3) the acquisition of WBL and a 1-for-1 rights issue.
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A relative of mine suggested United Engineers to me when I went around asking for investing ideas. I did a bit of homework to find out more about the company. It certainly looks attractive from the valuation perspective. The PER is less than 10, P/BV less than 0.7 and dividend yield of more than 5%. The net gearing is high at 78.4% but it could be reduced with the divestment of non-core assets from the acquisition of WBL. Stocks are usually cheap for a reason. Beyond the key fundamental ratios, the company has undergone significant changes in the past year and the future direction is unclear. Furthermore, the property and construction sector outlook is neutral at best. I am considering taking up a small position and monitoring the company to see whether the management is able to execute well and unlock shareholder value.
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