United Envirotech’s net profit crashed 84% to $3.7m in Q1

Profit fell short on back of weak engineering revenue.

United Envirotech (UEL) reported that its net profit crashed by a staggering 83.7% year-on-year to $3.7m in the first quarter.

According to Maybank Kim Eng, the group’s results fell short due to weak engineering revenue and a one-off divestment gain that was recorded in the same period last year.

The group was also hit with a one-off charge of $6.5m related to CITIC move to buy a majority stake in UEL.

“Although 1Q net profit fell short of our expectations, we are not overly concerned as the miss was largely from the engineering division which is lumpy and low-margin in nature,” said Maybank Kim Eng.

“UENV’s high-margin and more stable revenue streams, i.e. wastewater treatment and external membrane sales, remained solid. Our investment thesis for UENV remains intact. As CITIC becomes controlling shareholder, UENV is entering a new growth chapter by leveraging CITIC’s resources. We believe investors should not focus too much on its near-term earnings volatility during transformation period but on its long-term growth potential,” the report added.