United Group

United Group (UGL) retained a neutral rating from Australian stock analyst Macquarie Research Equities.

United Group (UGL) Wins $270m of New Contracts

$100m Contract with Melbourne Water:

UGL Infrastructure and partners have signed a 5 year, $260m (UGL share $100m) contract with Melbourne Water for the upgrade of MW's Eastern and Western sewerage treatment plants and associated pump stations.

$170m Resources Work:

Here is a strategy update on the Budget Impact on Equities provided by Australian market analyst UBS.

Strategy – Budget Impact on Equities

United Group (UGL) shares recommendation by Macquarie Research Equities: A disappointing result sees a stock price plunge. The stock analysts reaffirm their outperform guidance on the company.

The severity of the punishment meted out to diversified services provider United Group Limited (UGL) this morning after the company fell short of expectations, has illustrated the low level of tolerance that exists this reporting season. Despite the 46% rise in half year profits to 31 December 2007, UGL have fallen around 19% in the morning session after missing consensus forecasts.

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).