United Group

United Group Ltd.  UGL:ASX
 
United Group Limited is a diversified service group operating in mechanical & electrical engineering, fabrication, maintenance and construction, facilities management, and real estate services and business process outsourcing.

The Company has operations in Australia, New Zealand, South-East Asia, North America and Europe.  UGL invests in and builds businesses that require low levels of capital, have alliances with leading technology providers, and have earnings streams secured by long-term contracts and that are relatively insulated from business cycles. The latter attribute is a function of UGL providing in many cases services to essential infrastructure assets such as water treatment plants or power stations. The focus is on six core sectors: Rail, Water, Property, Utilities, Resources and Defence.

United Groupt employs 40,000 people (including subcontractors) operating in Australia, New Zealand, Asia, North America and parts of Europe and Middle East
It has a market capitalisation of over $2 billion
It has revenue approaching $4 billion
It has a $6.7 billion order book
It has a Government/Blue Chip customer base
It has a long term strategy of building vertical service offering to create increased value

Strong world demand and tight supply has pushed commodities to record prices.  Many analysts believe the global commodity market is placed for a long term boom based on continued growth in China and the possibility that India could become another major force driving demand.
Capital asset investment in the Resources market has more than tripled over the past 5 years.
Forecast investment is likely to rise by a further 12% over the next 2 years.
There has been a significant underspend on maintenance over the past decade with an anticipated catch up phase now underway.  This is where United Group can really benefit.
All of the above bodes very well for a company such as United Group.
 
UGL is utilising its technology alliances to expand offshore in a measured fashion and through the acquisition of the property services companies PREMAS, headquartered in Singapore, and Equis and UNICCO in the USA.   Earnings from the service division  has already lifted by 29% following the the integration of the UNICCO acquisition.
UGL reported a fiscal 2008 interim net profit of $53.3 million, which was up 11% on the previous corresponding period. 
Its resources business performed particularly well.  Earnings improved by 30%, largely due to a strong pipeline of new projects.
The group's order book increased by 52% and next year's forward orders are up by 48%. With regards to 2009 and beyond, we believe that the strength of this order book could underwite 20% earnings growth for a number of years.
EBIT increased 33% to $150.1m.
Dividends per share increased 9.1% to 48c, fully franked.  This represents a dividend yield of 3.9%
Net operating cash flow more than doubled to $130.2m.
All these financials are very encouraging for United Group, going forward.

United Groups share price is down more than 40% from the high of $21.86 at the start of November 2007.  With a P/E ratio of 16, this company looks like a bargain at current levels.

Buy United Group (UGL:ASX) up to $12