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Broker's take: SAC Capital keeps 'buy' on United Global on strong financials
SAC Advisors has raised its target price for United Global to 50 Singapore cents and kept its "buy" rating after the lubricant maker's first-half results and a recent acquisition.
The lubricant manufacturer and trader's first-half 2017 revenue and net profit were 8.3 per cent and 33.7 per cent higher year on year respectively, despite a 13.1 per cent drop in volume.
"Revenue was 2.8 per cent ahead of our estimates. The pleasant surprise was the surge in gross margins, which handily beat our forecast of 16 per cent to hit 17.2 per cent," SAC said.
The acquisition of PT Lubritama Indonesia in the second half of 2017 is expected to add manufacturing capacity, in line with Catalist-listed United Global's aim of boosting its manufacturing business.
SAC cited risk factors like fluctuations in base oil prices, cost of raw materials and the company's wide exposure to different sectors.
The counter was trading at 36.5 Singapore cents as at 12.13pm, up 2.82 per cent.