United Envirotech net profit surged 49% to $12.5m in 3Q15

Thanks to a jump in engineering revenue.

United Envirotech Ltd (UEL) experienced a good quarter, and is up for better days ahead.

According to a report by OCBC, revenue jumped 81% YoY (also +10% QoQ) to S$116.1m, lifted by a 74% YoY jump in engineering revenue, which came from its Fuzhou project, a 38% increase in treatment revenue, as well as an addition of S$11.4m of external membrane sales.

However, gross margin eased to 40% from 46% in 2QFY15 and 47% in 3QFY14. Reported net profit jumped 49% to S$12.5m, but it was about 25% lower QoQ due to the lower profitability.

9MFY15 revenue climbed 80% to S$287.8m, easily matching our full-year forecast, while reported net profit surged 143% to S$51.7m; core earnings of S$37.6m met about 95% of analysts’ FY15 forecast.

Separately, the offer from CITIC Ltd and KKR & Co to acquire a majority stake in UEL at S$1.65 cash/share should turn unconditional by 23 Mar; this as the consortium has gotten all the necessary government approvals in China.