UKEM, an update

UKEM and update. I still like it.   12-Noon on September 2 '10.

UKEM (0.84)  is a company I have visited in the past and reported here it has done well over the past year or so but not recently.

UKEM had a nice run for members in late in 2009 along with free warrants/dividends -and since has been stagnant with an earnings disappointment in Q 2. due to primarily as shown “cost of goods sold” increase.  Yet, the 6 month profit margin is on the up at most recently reported 2.79%.  You can see this at this SET link:
http://www.set.or.th/set/companyhighlight.do?symbol=UKEM&language=en&country=US

I think just like with SITHAI, UKEM had an adjustment in the 2Q which makes the earnings look bad but in fact its just a one time adjustment. In the case of SITHAI the insurance company will likely pay and in the case of UKEM the next 2 to 3 Q profit increases to come, are rosy, that is my sense.

Today according to Thai press reports, they expect earnings on the rise, as stronger Baht and oil prices is to their benefit.  UKEM imports many solvents/chemicals and so profit margins benefit when the Baht is strong.   This is one company in my picks which clearly benefits from a further rise of the Baht currency many now belive is likely.

UKEM believes’ 2,4 to 2.5 bill in revenue this year as prices and firmer and demand is up.  I think UKEM can earn 0.10 to 0.12 Baht per share this year, and more next years. And so with a current p/e of around 7-8 along with high dividend yield. To me UKEM appears undervalued, considering the further growth prospects in Thailand and this region.

UKEM is investing in Vietnam to sell solvents early next year.(Agent). Vietnam has huge demand for UKEM type products. 

In Q4 they plan listing on the MAI  Union Intrago for public trading as a new baby company.   This was expected previously for Q3 but paper work delayed it.  But Q3 profits will be better due to growth in basic domestic markets, like colors. Revenue in Q.3 to be not less then 600 mill.it was stated.

While it the listing of a new company is upbeat it was not disclosed the likely result of an one time earnings surge and perhaps special dividend next year?

Best Regards,
Paul Renaud.
www.thaistocks.com