United Group (UGL) Update

United Group (UGL) has a retained Outperform recommendation with a 12 month share price target of $16.88 from Australian share trading analyst Macquarie Research Equities. A technique often used to assess a stock's value is to compare it to its peer group, specifically assessing whether it is trading at a multiple discount. The analyst has identified a stock that is currently trading at a 10-15% discount to its peers in United Group (UGL). The analysts expect UGL to report its FY07 result on the 13th of August. PPP costs to impact FY07. They expect FY07 NPAT of $92.3m, up 17.2% on pcp of $78.7m. Earnings growth will be driven by the Alstom and Equis acquisitions and order book growth. The failed Sydney rail PPP bid cost will impact FY07 earnings by $18m. There is life after the PPP contract. While UGL has missed out on the NSW, PPP contract there are several other opportunities available in the rail sector. A recent NSW government press release stated that a review to refurbish the 600 Tangara and V-Set trains is to report in mid 2007. This is likely to be the next large train contract opportunity in NSW. Non-residential market remains strong. Given the momentum in the non-residential cycle, The analysts see 19.5% underlying organic EBIT growth in FY08 based on the strength of the cycle and contract outlook. United Group is also rationalising its back office following recent acquisitions and is looking to make material cost reductions. The analysts expect UGL's order book to be maintained at $4.4bn compared to $4.3bn as at 30 June 2006. An extra $1.0bn in contracts has been awarded in 2H07. The pipeline continues to be excellent with several large jobs coming up for tender. United Group has long been one of the analysts' preferred stocks to benefit from the strength of the non-res cycle and is now offering solid value relative to its peer group (WOR, TSE, LEI).

United Group Limited is listed on the Australian Stock Exchange (ASX) under stock code UGL. You can view their investor website here. UGL was listed on the ASX on 19 December, 1994. The company is a diversified electrical and mechanical engineering, construction and maintenance group servicing clients in the energy, mining, mineral processing, petrochemical, refinery, chemical, government utilities and industrial sectors, operating throughout Australia. The chairman for United Group is Trevor Rowe and the Managing Director is Richard Leupen. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade UGL. Check your charts and good luck with your share trading!