Analysing an Integrated Service Provider with YTD Return Exceeds 100%

Article Highlights

• Turnaround in Uni-Asia's bottom line for trailing 12-month period
• Positive free cash flow in the trailing 12-month period
• Yamasa Co. Ltd. Is the largest shareholder for Uni-Asia
• Sharp improvement to Uni-Asia's total dividend per share

Uni-Asia Group Limited (“Uni-Asia”) is an alternative investment group specialising in creating alternative investment opportunities and providing integrated services relating to such investments.

The Group’s alternative investment targets are mainly cargo ships and properties. The Group also has extensive know-how and network relating to such alternative investments and provides services relating to these investments. The two main alternative asset classes the Group focuses in are Shipping and Property.

Evaluating Uni-Asia Group Limited using 4 Financial Metrics

Revenue & Net Profit

For FY2020, Uni-Asia's revenue (Blue Bar) crashed by more than 60% year-on-year to just S$60.74 million. The significant drop can be attributed to the deconsolidation of hotel operating business, which resulted in the loss of revenue. Apart from that, the lower investment income and charter income also contributed to the decline in revenue.

Meanwhile, Uni-Asia slipped into the red for FY2020, with losses amounting to S$9.88 million. This was due to a higher impairment loss/loan write-off in FY2020 as a result of COVID-19.

For its trailing 12-month financial performance, Uni-Asia's revenue grew by 20.6% to S$73.27 million. The growth was supported by higher charter income and the sale of property under development, partially offset by a lower fee income.

With higher revenue and lower operating expenses, Uni-Asia's bottom line is back in the black, with a profit after tax of S$5.01 million.

Free Cash Flow

After having a positive and growing free cash flow in FY2018 and FY2019, Uni-Asia has recorded a negative free cash flow of S$2.87 million in FY2020. This was due to a significant drop in its net cash from operating activities, as the ship charter market and hotel operating business were severely impacted by COVID-19.

With the improvement to shipping market as well as sale of property under development, this resulted in a higher net cashflow from operating activities and hence allowing Uni-Asia's free cash flow to turn positive for the trailing 12-month period.

Ownership

Based on the table above, the largest shareholder for Uni-Asia belongs to Yamasa Co. Ltd., which has a 30.00% stake in the Group. Yamasa Co. Ltd.’s line of business includes providing trucking or transfer services.

The second largest shareholder belongs to Ham Yong Kwan, who has a 10.01% stake in the Group. He is considered as a private investor to Uni-Asia and does not hold any position in the company.

Dividend

As a result of the weaker financial performance in FY2020, Uni-Asia's total dividend per share has revised downwards by more than 75% year-on-year to just 1.0 Singapore cents per share.

With the recovery in its financials for the trailing 12-month period, Uni-Asia has boosted its total dividend per share to 3.0 Singapore cents. On top of that, its dividend payout ratio came in at just 49.5%. This indicates that the Group is striving to balance the interests between investors and the company itself.

Based on the current share price of S$1.34, this translates into a dividend yield of 2.24%.

Conclusion and Prospects

To conclude, Uni-Asia had a rough FY2020, mainly due to the pandemic, which resulted in a heavy impact on its financial performance. However, with the improvement in the shipping market, this has allowed Uni-Asia to successfully stage a turnaround in its financial performance.

In terms of management outlook, Uni-Asia expects the demand of dry bulk carriers to greatly outstrip the supply until end 2022 which bodes well for its shipping segment.

For its Hong Kong property segment, Uni-Asia sees a potential recovery in sentiment given the widespread vaccination and successful containment of the pandemic. The Group remains prepared to launch aggressive sales activities for the Group’s forth and fifth projects once there is a broad-based recovery for the property market.

For its Japan’s property segment, the assets under management by subsidiary Uni-Asia Capital (Japan) Ltd has increased from around JPY30 billion as at end of 2020 to around JPY32 billion as at end of June 2021. The Group is exploring new business opportunities as well as investment structures to expand income stream and returns from its property business in Japan.

Finally, notwithstanding the negative impacts from the pandemic, the Group’s business diversification also ensures a robust and varied source of income for the Group. The Group will continue to seek growth both organically and inorganically through the exploration of new opportunities.

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