Universal Adsorbents & Chemicals

Universal Adsorbents & Chemicals Plc

4Q13 net profit was half our estimate of Bt57mn at Bt28mn, +98.3% YoY on
equity income from BBF (Bt29mn vs. Bt1mn) but -33.2% QoQ as gross margin shrank to
11.2% from the 9M13 average of 19.3% and SG&A/Sales rose to 13% from 9M13 average
of 11.4%. (It holds 30% in BBF a joint venture with BCP.
2013 net profit was Bt130.8mn, +12.2% YoY, missing our Bt160mn. Backing this
was 20.5% YoY growth in revenue from sales and services to Bt978mn. New projects did
well, with Bt150.8mn from the water treatment and factory dust filtration projects
and Bt64.2mn from overseas sales. Equity share contribution was Bt78mn in 2013.
2014 to bring greater revenues from new projects. UAC started a new biogas
business but in 2013 opened only one of the full 11 factories, which was in the latter
half of 4Q13, thus booked revenue of just Bt0.3mn against costs of Bt10mn, missing
our forecast of Bt15mn in sales and Bt4mn gross profit. We expect to see significant
improvement in 2014 with total sales of Bt166mn and gross profit of Bt50mn.
Like its alternative energy focus; maintain Buy with TP of Bt11. We favor this
stock because of its focus on alternative energy through Compressed Bio-methane Gas
(CBG) and Petroleum Production Project (PPP), which offer high margins and will boost
earnings strongly from 2014.
4Q13 Highlights:
Revenue was Bt201mn, below our Bt350mn, +7.5% YoY on higher revenue from
projects and overseas sales; -29% QoQ.
Gross margin sank to 11.2% from 21% in 3Q13 and 21.9% in 4Q12. SG&A/Sales was
13% from 10.2% in 3Q13 and 13.1% in 4Q12. Biogas business (CBG) ran at under
breakeven. Construction, 15% of total revenue, reported gross margin of only 4%.
Core profit was Bt28mn, half our estimate of Bt57mn, +98.3% YoY but -33.2%
QoQ. 4Q13 bottom line was positive on equity income from associates of Bt29mn.