# UGL - UGL Limited



## 3 veiws of a secret (12 May 2006)

I have held this share for almost 4 years, constantly topped up along the way and I'm beginning to think is it time to bank soon......
My Qu:
Does anybody out there have this share in their portfolio???

Keen to read your thoughts on this share. Life is good with UGL.


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## Sainter (16 May 2006)

*Re: UGL - United Group*

Howdy,
Personally I think UGL has a bit more to go. I first bought in '99 and have been richly rewarded since. I did think at the start of this FY that maybe it was time to take some profit, so after the SPP earlier this year I did sell some-the price had jumped to $10.13! Fortunately for me it was only ~15% of my holdings. I think that the imminent NSW train deal, which supposedly has UGL with the inside running, coupled with the ongoing commodities boom, plus the infrastructure spending announced in the budget the other week should see UGL good for at least another year or so. 

Cheers!


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## GreatPig (16 May 2006)

*Re: UGL - United Group*

I've only been holding it since mid-January this year but the 24.5% gain I've got on it already is very nice.

No idea where they're going, or even what they really do, but while they're going there I'll be along for the ride .

GP


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## michael_selway (17 May 2006)

*Re: UGL - United Group*



			
				Sainter said:
			
		

> Howdy,
> Personally I think UGL has a bit more to go. I first bought in '99 and have been richly rewarded since. I did think at the start of this FY that maybe it was time to take some profit, so after the SPP earlier this year I did sell some-the price had jumped to $10.13! Fortunately for me it was only ~15% of my holdings. I think that the imminent NSW train deal, which supposedly has UGL with the inside running, coupled with the ongoing commodities boom, plus the infrastructure spending announced in the budget the other week should see UGL good for at least another year or so.
> 
> Cheers!




yeah I agree WOR, UGL, DOW, these ones should still be good for thsi year atleast, next yr possibly, but after that cant say, might be a turn around

GP nice, but playing dangerously imo, if you buy not knowing what they really do etc

thx

MS


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## 3 veiws of a secret (17 May 2006)

*Re: UGL - United Group*

Well ,what is being explained to me is nothing new (with utmost respect to other opinions). I did a search for UGL & was amazed nothing found on ASF!.
I was very fortunate to listen /heed my old friend and stockbrocker from "Potters" the only thing is that I regret not topping up at 87 CENTS or even 94 CENTS!!!!!! after buying a slice @ 3.25. 
This once WA company has excelled itself beyong my widest imagination,and I have gut feel it is trying to catch WES share price of today ,but this is wishful thinking. But when GE helped in the purchase in Gonnigan's,this share was going to be in my pocket for the long haul....
Richard Leupen ( schpelling) and his team ,if making the Alstom transition a success ,will make me sit up and listen where he wants this UGL to stride forward next .I have still to see when they loose their first contract/tender etc etc ,but my wife begs me to buy some for her. :swear: 
Needless to say I like this company why not when I'm 100K + up on it,but one day I will need to sell


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## Sean K (17 May 2006)

*Re: UGL - United Group*

It will need a couple of big acquisitions if it's going to catch WES's sp. MAH is an easy target and would compliment it's operations. Or merger with WOR or DOW maybe. There's a bit of room for consolidation in the sector I reckon, which so far hasn't really occurred, which in this environment is a little odd. They are all screaming about skilled labour, equipment etc...Maybe we'll see that action soon enough.


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## 3 veiws of a secret (17 May 2006)

*Re: UGL - United Group*

I like the direction UGL took when they bought Premas(?) in Singapore, cannot but feel UGL is out to impress, in many ways then one . Consolidation in Oztralia sure, but! I get the impression Asia is the next cosy target......time will tell    
But seriously this stock has some stamina in its legs ,I just hope it does'nt get cramp too soon!


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## 3 veiws of a secret (29 June 2006)

*Re: UGL - United Group*

Ok I said Asia ,but now America also? ........
I'm a happy chappy,this share is on steriods watch out !....


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## michael_selway (29 June 2006)

*Re: UGL - United Group*



			
				kennas said:
			
		

> It will need a couple of big acquisitions if it's going to catch WES's sp. MAH is an easy target and would compliment it's operations. Or merger with WOR or DOW maybe. There's a bit of room for consolidation in the sector I reckon, which so far hasn't really occurred, which in this environment is a little odd. They are all screaming about skilled labour, equipment etc...Maybe we'll see that action soon enough.




WOR - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 31.2 67.0 86.7 103.3 
DPS 20.0 40.5 51.8 62.0 

UGL - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 40.4 61.4 74.3 86.1 
DPS 30.0 43.0 51.0 58.4 

DOW - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 32.8 48.3 55.4 61.4 
DPS 18.0 25.0 28.0 31.0 

MAH - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 5.0 5.8 6.7 8.0 
DPS 1.0 1.5 2.5 2.5 

thx

MS


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## 3 veiws of a secret (3 July 2007)

*Re: UGL - United Group*

In the last 15 mins somebody has just bought up UGL shares at crazy /frenzy prices ,needless to say it makes my portfolio glow in the dark.


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## 3 veiws of a secret (3 July 2007)

*Re: UGL - United Group*

Funny how the market caught wind of the info/announcement ,as I struggled to grasp the cause -Still I'm happy as a pumpkin   Tell e'm Little Richard Leupen.......

United Group secures over $220 million in new Water projects
Leading engineering and services company United Group Limited (ASX: UGL) today announced that its
Infrastructure business has secured over $220 million of new water and wastewater projects throughout
Australia. The new projects also signal a strengthening of United Group’s partnership with GE as it
expands its operations in the essential infrastructure sectors.
Recent projects wins include:
• Nomination of preferred tenderer status for the delivery of the Western Sydney Recycled Water
Initiative – Replacement Flows Project as part of the Deerubbin WaterFutures Consortium,
which consists of United Group Infrastructure, GE Water and the McConnell Dowell
Constructors. The project will see wastewater from St Marys, Penrith and Quakers Hill sewage
treatment plants being treated using GE’s Zeeweed and reverse osmosis technology, to
provide potable replacement high quality water for environmental flows.
• In joint venture with GE Water, construction of nine water treatment plants for country
townships along the Murray River for SA Water.
• Design, construction and commissioning of works associated with North Head STP PARR
Improvement Project for Sydney Water in an alliance with major partner John Holland,
designers Patterson Britton and MWH Australia, and Manidis Roberts for the environment.
• Increased scope of works associated with the Gibson Island Advance Water Treatment Plant,
as part of the Western Corridor Recycled Water Project, announced in March 2007. The
project will now have an increased total net output from 35ML/day to 50ML/day of recycled
water.
United Group’s Managing Director and CEO Richard Leupen said these new projects reflect the
continued strength of spending in essential infrastructure markets in Australia, as well as the fact that
United Group’s risk is well spread across a broad number of projects it has in the water sector.
“The spending on infrastructure such as water, power and transport in Australia is continuing, and State
Governments remain committed to improving essential services in suburban and regional areas. United
Group is establishing a leading position in the water sector in all major states as reflected by these new
projects in New South Wales, Queensland and South Australia.
“Our partnership with GE Water is particularly pleasing and offers the Group significant opportunities to
expand its presence in the water sector both in Australia and internationally. GE has indicated that
infrastructure remains one of its major growth channels going forward, and United Group is well placed
to partner with GE Water as it pursues a broad range of opportunities in Australia and throughout Asia.
“United Group is currently involved in over 20 projects undertaking engineering, construction and
maintenance works in the water sector both in Australia and in South East Asia so we are not reliant on
any one major project. The pipeline of bidding opportunities in both markets is very encouraging” Mr
Leupen said.


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## 3 veiws of a secret (11 July 2007)

*Re: UGL - United Group*

*Trading halt again....*it's like the train I use to commute on from Kent to Charing Cross stops at every station ........
Here's the announcement ......


ASX RELEASE
(Not for distribution in the United States or to US persons)
11 July 2007
ABN 85 009 180 287
United Group Acquires UNICCO for A$477 million
 United Group Limited (“United Group”) acquires US-based integrated facilities
management (FM) services company, UNICCO Service Company (“UNICCO”) for A$477
million (US$408 million)1
 Attractive acquisition price – 9.8x FY08E UNICCO EBITDA
 UNICCO is an integrated provider of FM, operations and maintenance, janitorial,
engineering, administration, and landscaping and grounds maintenance services
 Key acquisition in developing United Group’s strategy to establish a leading global
provider of property services, including corporate real estate (CRE) and FM services
 Strengthens United Group’s presence in the US and Canada and provides a strategic
platform for continued growth
 Acquisition to be funded through
”” A$231 million institutional equity placement2 in conjunction with a share purchase plan
”” Conditional institutional equity placement of an additional A$50 million subject to
shareholder approval
”” Issue of ~A$70m to vendor
”” New and existing debt facilities
 Mr. Steve Kletjian, UNICCO’s majority equity holder will become a major shareholder of
United Group and will provide advisory services to United Group’s Managing Director and
CEO and to the United Group Board
 Additional payment of A$33 million to receive potential US tax benefits valued at
approximately A$85 million to be realised over 15 years through ongoing tax benefits
 Acquisition is expected to be around 5% EPS accretive in the first year of the acquisition,
before the impact of synergies
United Group has entered an agreement to acquire US integrated facilities services
company UNICCO for A$477 million, with A$407 million payable in cash and the remainder
payable in United Group shares to be issued to the vendors.
UNICCO is an excellent fit with United Group and is a key step in United Group’s strategy to
create a leading global provider of CRE and FM services. Completion is expected in
September 2007, subject to satisfaction of customary consents, approvals and conditions.
Founded in 1949, and headquartered in Newton (Boston), Massachusetts, UNICCO is a
leading provider of integrated FM services in the US, servicing more than 1,000 customers
at more than 5,000 sites. UNICCO has approximately 18,000 employees who provide FM,
operations and maintenance, janitorial, engineering, administration, and landscaping and
grounds maintenance services. UNICCO has a 95% customer retention rate and its top
fifteen customers by revenue have utilised its services for an average of twelve years.
1 AUD / USD exchange rate of 0.855 assumed throughout this announcement
2 Based on underwritten floor price of A$16.30 per share
Page 2 of 3
UNICCO is expected to deliver FY08 revenue of US$770 million (A$900 million) and
EBITDA of US$41.5 million (A$48.5 million).
UNICCO’s Chairman and majority equity holder, Mr. Steve Kletjian, will retire from full time
employment upon completion of the acquisition. The existing senior management led by Mr.
Louis Lanzillo and Mr. George Keches remain committed to the business and will continue to
drive its future growth. Mr. Kletjian will continue to provide advisory services to United
Group's Managing Director and CEO and to the United Group Board.
United Group’s Managing Director and CEO Mr. Richard Leupen said: “This is a major step
in United Group’s growth and a unique opportunity for the Group to secure a leading
presence in the growing US FM market. The acquisition fits with our strategy of growing our
global property services model and partnering with leading blue chip customers and
government departments.
“United Group has provided FM services to blue chip customers and government
departments for more than ten years and it is a market we understand very well. UNICCO is
an excellent fit with United Group’s existing property services and FM operations.
Customers are demanding CRE and FM services and we can now provide this in the United
States with UGL Equis and UNICCO as well as in other international markets.
“UNICCO has a highly regarded brand name and impressive long standing customer base.
The US property services market is continuing to expand and United Group will now be a
larger, integral part of this growth.
“UNICCO positions United Group’s Services business as a leading property services
business with more than 21,000 staff across 13 countries and annual revenue of around
A$1.3 billion.
“This is our fourth acquisition in property services. United Group has a track record of
integrating acquisitions and maximising shareholder value. I am delighted that UNICCO’s
management team has committed to stay with the business and work with United Group to
achieve our growth objectives. We are now another step closer to becoming one of the
world’s leading CRE and FM services companies.”
Financing
Equity funding will be raised through a fully underwritten institutional placement of A$281
million. Of the institutional placement, A$50 million will be conditional upon shareholder
approval at an EGM of United Group, expected to take place in August 2007. Terms of the
acquisition include the issue of ~A$70m of United Group shares to the vendors of UNICCO.
Mr. Richard Leupen, Managing Director and CEO of United Group, intends to take an
allocation of A$3 million under the placement, conditional upon shareholder approval at the
forthcoming EGM.
In addition, a share purchase plan will be offered, under which eligible United Group
shareholders are each entitled to subscribe to shares up to the value of A$5,000. Further
details of the Share Purchase Plan will be mailed to shareholders shortly.
The balance of the funding is expected to be provided by senior debt facilities.
Outlook
United Group expects another strong result in FY07, in which NPAT is expected to exceed
A$90 million, subject to the final audit review. Historical strong growth will continue in FY08,
with revenues expected to be around A$4 billion.
- End -
Page 3 of 3
Goldman Sachs JBWere acted as financial adviser to United Group for the acquisition and
as Underwriter and Sole Lead Manager and Bookrunner of the placement.
NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OR TO U.S. PERSONS
For further information, please contact:
Richard Leupen, Managing Director & CEO, United Group Limited: +612 9492 8803
Teresa Aruego Easter – Group Manager Corporate Affairs: +612 9492 8842 or +61 401 147 822
United Group (ASX - UGL) is a diversified services company specialising in maintenance, facilities management,
manufacturing, fabrication, engineering, construction and business process outsourcing. The group consists of four businesses
each with specific complementary services:
United Group Infrastructure is a multi-service business offering construction, engineering, operational and maintenance
services to the water, power, communications, road & rail transport and defence industries
United Group Rail is Australia’s foremost rail and rolling stock company offering services such as; engineering and
manufacturing, refurbishment and remanufacture, maintenance services and spare parts
United Group Resources is a long term solution provider of multi-discipline services to clients in the resources industry
United Group Services is a premier global provider of outsourcing services. Services include corporate real estate, facilities
management, project management, finance and accounting, procurement, human resource management and learning
This announcement does not constitute an offer of securities for sale in the United States. Securities may not be offered or sold
in the United States or to, or for the account or benefit of, U.S. persons (as such term is defined in Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act")) unless they are registered under the Securities Act or an exemption
from registration is available.
This announcement includes forward-looking statements regarding future events and the future financial performance of United
Group, including statements that the transaction is expected to be accretive. Any forward-looking statements involve subjective
judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the
control of, and are unknown to, United Group and its officers, employees, agents or associates. Actual results, performance or
achievements may vary materially from any forward-looking statements and the assumptions on which those statements are
based. Given these uncertainties, you are cautioned that this announcement should not be relied upon as a recommendation
or forecast by United Group. United Group undertakes no obligation to revise the forward-looking statements included in this
presentation to reflect any future events or circumstances. In addition, United Group's results are reported under Australian
International Financial Reporting Standards, or A-IFRS. This announcement includes references to EBITDA. These references
to EBITDA should not be viewed in isolation or considered as an indication of, or alternative to, measures reported in
accordance with A-IFRS or as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity.


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## 3 veiws of a secret (17 August 2007)

*Re: UGL - United Group*

Well with the recent share purchase plan of $17 passed me by today @ 1700hrs ,I wonder who bought in when the days share price hovered $15.55>$15.85 ? 
Seems UGL might have to borrow some dollars to pay for it's recent purchase...will it have a knock on effect to earnings?


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## Lachlan6 (17 August 2007)

*Re: UGL - United Group*

Another example of a quality stock getting hit with the market correction. I am going to enter (UGL), it may have a little more downside back to strong area of support at around $15.00, but will wait for a reversal confirmation then I will jump in. Estimated 2009 EPS of 110. Its almost (maybe) time to go shopping


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## Sean K (11 February 2008)

*Re: UGL - United Group*

Obviously these numbers were not as good as the market expected.



> *DJ United Group 1H Net Rises 46% To A$51.5M, Outlook Strong*
> 
> 11/02/2008 09:16AM AEST
> 
> ...




Stock was off 20% at one point...


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## pepperoni (11 February 2008)

*Re: UGL - United Group*

From $22 to under $12.  If you look at the performance of each sector and ignore the $20m ppp write off last year these guys are going nowhere, even with many $100m spent on service company aquisitions.  Seems the market may have woken up to this company's loopy strategies and management. Subprime issues in the US will decimate property services there mid term.  

Its going to be all downhill from her and only a matter of when the market works it out. 

I wouldnt be surprised if they announce a new ceo before the end of the financial year.


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## Ferret (11 February 2008)

*Re: UGL - United Group*

I can't see how this result deserved a 25% fall in share price.  Just seems to show how nervous the market is at the moment.  Even the smallest failure to live up to expectations this reporting season is going to be severely punished.

I'm going to look at some analyst's reports tomorrow and see if I've missed something about the result.  If I haven't, I'll be looking to buy on the first sign of a bounce.

Ferret


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## reece55 (11 February 2008)

*Re: UGL - United Group*



Ferret said:


> I can't see how this result deserved a 25% fall in share price.  Just seems to show how nervous the market is at the moment.  Even the smallest failure to live up to expectations this reporting season is going to be severely punished.
> 
> I'm going to look at some analyst's reports tomorrow and see if I've missed something about the result.  If I haven't, I'll be looking to buy on the first sign of a bounce.
> 
> Ferret




Ferret
Look deeper into the result and think about UGL's valuation metrics - this is an entity with a high valuation (well, was....) that has delivered a result that shows slowing in profits. The expectations when a stock is at 20 times forward earnings is that it must continue to have 15 - 20% eps growth in perpetuity to maintain it's valuation..... The reality is that if firms profits rose at this rate in perpetuity, we would have about 12% inflation. UGL isn't alone.... look at TPI, TSE BKN and WOR....... sector analysis suggests that the boom times for engineering firms are not as bright going forward....

Cheers


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## michael_selway (11 February 2008)

*Re: UGL - United Group*



reece55 said:


> Ferret
> Look deeper into the result and think about UGL's valuation metrics - this is an entity with a high valuation (well, was....) that has delivered a result that shows slowing in profits. The expectations when a stock is at 20 times forward earnings is that it must continue to have 15 - 20% eps growth in perpetuity to maintain it's valuation..... The reality is that if firms profits rose at this rate in perpetuity, we would have about 12% inflation. UGL isn't alone.... look at TPI, TSE BKN and WOR....... sector analysis suggests that the boom times for engineering firms are not as bright going forward....
> 
> Cheers




There may be exceptiosn like MND & AAX?

thx

MS

*UGL - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 79.3 92.0 106.5 120.1 
DPS 48.0 58.0 68.0 76.0 *



> Back
> Date: 21/1/2008
> Author: Angus Grigg
> Source: The Australian Financial Review --- Page: 12
> ...


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## Miner (21 June 2008)

*Re: UGL - United Group*



michael_selway said:


> WOR - Earnings and Dividends Forecast (cents per share)
> 2005 2006 2007 2008
> EPS 31.2 67.0 86.7 103.3
> DPS 20.0 40.5 51.8 62.0
> ...






Hi MS

While searching for UGL and MAH I got your posting from 2006.
Good one and what do you think the numbers are in 2008 since you predicted or extracted from some forecast and what are the current readings

I think UGL is a good company or better one since then and so is MAH, WOR

Not sure on DOW at current business perspective


This is not a criticism but a query as you often try to provide good information

I do not know why this 100 character some times make the message unnecessary longer than required, Very inefficient burden at some times
Regards


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## michael_selway (22 June 2008)

*Re: UGL - United Group*



Miner said:


> Hi MS
> 
> While searching for UGL and MAH I got your posting from 2006.
> Good one and what do you think the numbers are in 2008 since you predicted or extracted from some forecast and what are the current readings
> ...




I think atm, all of these engineering companies are all in fair value now 

*WOR - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 100.4 146.3 178.9 213.5 
DPS 60.5 84.0 103.5 125.3 

LEI - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 162.0 215.5 258.8 325.0 
DPS 110.0 143.0 170.0 217.0 

UGL - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 79.3 82.7 96.7 108.5 
DPS 48.0 55.5 63.5 73.5 

TSE - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 46.0 54.4 66.9 75.4 
DPS 31.0 36.0 40.0 45.0 

DOW - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 51.0 50.3 56.6 60.5 
DPS 21.0 24.8 26.5 28.0 

AAX - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 48.8 70.3 86.0 98.0 
DPS 30.2 43.0 51.5 60.0 

MND - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 71.1 74.3 86.2 93.7 
DPS 66.0 68.0 75.0 80.0 

BKN - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 45.8 54.7 63.0 70.9 
DPS 31.5 35.0 39.8 47.9 

MAH - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 6.3 8.7 10.7 13.5 
DPS 3.0 4.5 5.5 7.2 *

thx

MS


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## Miner (22 June 2008)

*Re: UGL - United Group*



michael_selway said:


> I think atm, all of these engineering companies are all in fair value now
> 
> *WOR - Earnings and Dividends Forecast (cents per share)
> 2007 2008 2009 2010
> ...





Thanks Micahel for a very prompt response

I hope UGL and BKN would be a good opportunity for Monday with some profit taking taken place for June end and DJ downfall on Friday

Regards


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## AQR (28 November 2008)

*Re: UGL - United Group*

Any thoughts on where this company is heading?
I did well with this company 10 years ago and I'm now having another look.
It SP has certainly retreated.

Thanks, Geoff.


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## wooduk (19 December 2008)

*Re: UGL - United Group*

UGL is an ATM machine as far as dividends andtheshare price? well look at thes P/E,some analysis may reckon tht the share price should be in the $6 buck range,if so then let go ,as far asI,m concerned I am buying


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## Mr Capital (19 January 2009)

*Re: UGL - United Group*

UGL seems to have held up quite well over the past 3 months, after a bit of a beating mind you. (mid-late November 08 to current) 
Any ideas how this company may hold up during the reporting season ?
and thereafter.

Thanks 


ASX/MEDIA RELEASE
January 19, 2009
United Group Limited secures $78 million locomotive order
Engineering and property services company United Group Limited (ASX:UGL) is
pleased to confirm it has secured an order worth $78 million to supply locomotives to
Australian transport company QR.
Under the contract, UGL Rail will supply 12 diesel electric locomotives from its
Broadmeadow plant in New South Wales to QR Intermodal between July and
December 2009.
The contract includes an option for QR to purchase an additional six locomotives.
The fuel-efficient locomotives combine UGL Rail’s proprietary design with
international technology, reflecting UGL’s ability to supply its blue-chip clients with
tailored products and solutions.
UGL Managing Director & CEO Richard Leupen said: “The need for cleaner and
more efficient technology as Australia’s freight task shifts from road to rail indicates
ongoing demand for locomotives and spare parts.
“Given our extensive rail industry experience and the strength of our technology
partnerships, we are particularly well-placed to respond.”



ASX/MEDIA RELEASE
December 23, 2008
United Group Limited secures $120m of power contracts
Engineering and property services company United Group Limited (ASX:UGL) has
won new work in the power sector that will generate an anticipated $120 million in
revenue for the company over the next 18 months.
• UGL Infrastructure will install two energy efficient, 45-megawatt GE LM6000
gas turbines for ATCO Power at the Karratha power station in the Pilbara,
Western Australia.
• UGL Infrastructure will design and construct electricity substations for
Powerlink Queensland in the Brisbane suburbs of Belmont and South Pine.
• BBUGL, a business partnership between UGL Infrastructure and international
construction and engineering group Balfour Beatty, will construct 275-kilovolt
transmission lines from Strathmore to the Burdekin River and from South Pine
to Sandgate for Powerlink Queensland.
• UGL Infrastructure has also secured a contract to install a substation in the
Black River area near Townsville in Queensland for Ergon Energy.
UGL Managing Director & CEO Richard Leupen said the contract wins were further
evidence of robust demand in the company’s core markets such as power
generation and transmission, despite weaker economic conditions.
“Most of UGL’s revenue comes from providing essential services to the
infrastructure, water, power, transport and resources sectors,” Mr Leupen said.
“We have a strong position in markets that continue to trade strongly and we are
well-placed heading ito the new calendar year.”


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## michael_selway (17 February 2009)

*Re: UGL - United Group*

HeyUGL loosk good with half yearly

United Group Limited in good shape after solid first-half result
• Revenue up 48 per cent to $2.3 billion
• Net profit after tax up 29 per cent to $68.8 million*
• Interim dividend up 21% to 29 ¢
• Order book at a record $8.3 billion
• Robust balance sheet position
• No drawn debt maturing until financial year ending 30 June 2011
* adjusted for amortisation of intangible items

*Earnings and Dividends Forecast (cents per share) 
2008 2009 2010 2011 
EPS 83.7 93.2 94.9 104.7 
DPS 58.0 62.0 63.0 66.4 *







thx

MS


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## billv (8 March 2009)

*Re: UGL - United Group*

How well do you know UGL?

Is the GFC going to affect them
Do you think they'll reduce dividends?

I've read somewhere that a large percentage of their revenue comes from services and property management 
and those areas won't be affected by the GFC but who knows???


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## wooduk (13 March 2009)

*Re: UGL - United Group*

The concern for ugl could possibly be stated the big institution buyers have a lot to gain in UGL,option traders have thier game plan as the price declines for no common sense reason.

This company has wide diversification in mining,water,electricity,real estate,maintenance,rail infrastructure,heavy engineering,ports,for an employer and I state again an employer of PAYE AND SALARIED staff of 3600 people at last count and a P.E.of 7or8 to 1 why would you not keep buying a diversified blue chip like UGL.

Andy Sumner past statements that I have read interprets for me a company that intends to be around a long time as an Australian company.

UGL demands one thing disciplne and loyalty in its endevour to beat this cursed financial debacle that all of us are saddled with.

In saying this as the market worsens expect ALL shares to fall some more and rapidly than others,at the end of the day a 29 cent end of year div in these daze of daze and a possible increase in the half year div. I am down on the cash I have put in,on paper yes,BUT having NO intentions of selling ,I will-- and I am putting my money where my mouth is,and by the end of the financial year I am committed to buying $10,000 of UGL

Screw the doomsayers,seize the day


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## billv (13 March 2009)

*Re: UGL - United Group*

wooduk

From what I read UGL has over 30,00 people and about 9 billion $ in current orders and with the fed gov and every state about to start spending on Infrastructure, UGL should pickup some of those directly or indirectly as a subcontractor. 

I am not worried about UGL shares, I think they are oversold for no real reason so this means that when people wake up their shares will rebound.

10,000 sounds good I wish I could do the same 
I've got about 1000 and I am buying in regularly. 
I used to pay $23 for them and now I am buying them for $7 and the company fundamentals haven't changed.
Hopefully their shares will stay cheap for a while so that I can add more to my collection....


----------



## billv (17 March 2009)

*Re: UGL - United Group*

I came across the ASX media release from feb
http://www.unitedgroupltd.com/templates/pdf/HY09 - Media Release.pdf



> Revenue up 48 per cent to $2.3 billion
> • Net profit after tax up 29 per cent to $68.8 million*
> • Interim dividend up 21% to 29 ¢
> • Order book at a record $8.3 billion
> ...


----------



## wooduk (22 July 2009)

*United group*

Looking for peoples opinions on this company,and how it structured.I do know that A.Sumner is the CEO,and has a lot of respect in managing a creature like this that is as diversified as this company,I have read on that Worley Parsons that manufacture would be the nearest rival to UGL,but I do not know enough to comment on WP


----------



## wooduk (26 July 2009)

*Re: UGL - United Group*



billv said:


> I came across the ASX media release from feb
> http://www.unitedgroupltd.com/templates/pdf/HY09 - Media Release.pdf




I have been a sleep at the wheel, this management model could teach other moron companies how to run .UGL are the prince of princes in this economic world.I am ticked off that the employee share plan was wiped out by that dumb ass Swan treasurer or userer,not a treasurers bootlace.
Now that MTR has the victorian rail operation and UGL has 20% of the operation and John Holland group has 20%,I doubt that the employee share plan will come back'as of this date UGL trading $11.78 p/s


----------



## billv (26 July 2009)

*Re: UGL - United Group*

Wooduk
I kick myself for not selling 1 of my dog properties and buying 50000 UGL shares instead. 
Since March I would have made $250000 ....


----------



## billv (26 July 2009)

*Re: UGL - United Group*

on 2nd thought, I wouldn't have been able to do it anyway
because it's the bank's money and they wouldn't let me spend it buying shares


----------



## Pioupiou (29 August 2012)

*Re: UGL - United Group*

Good to see directors buying.

Name of Director: Richard Humphry
Date of last notice:  17 August 2012
Date of change: 1)  24 August 2012 - - - 2)  27 August 2012
Number acquired: 1)  2,000 - - - 2)  1,900
Value/Consideration: 1)  $20,905 - - - 2)  $19,855
Securities held after change: 182,172
Nature of change:  On-market trade


----------



## Julia (27 February 2013)

*Re: UGL - United Group*

Has anyone been following UGL recently?  Cause for gap down on 20 February?


----------



## So_Cynical (27 February 2013)

*Re: UGL - United Group*



Julia said:


> Has anyone been following UGL recently?  Cause for gap down on 20 February?




Had to be insiders selling, today's fall linked to the half year results being not to flash.

http://ugllimited.com/templates/pdf/halfyear_2013_presentation.pdf

EPS Revenue NPAT Profit, all down...Debt and gearing up.

And the private infrastructure bubble hasn't popped yet...so the outlook just cant be to good.


----------



## Julia (27 February 2013)

*Re: UGL - United Group*

Thanks for the comment, SC.


----------



## Ferret (28 February 2013)

*Re: UGL - United Group*

Bought some today.  Although the profit result was poor, I thought I read some optimism in the outlook.  

Holding the interim dividend at 34c also seemed to indicate that it isn't all falling apart.  Now the yield's close to 7% too.


----------



## JTLP (15 May 2013)

*Re: UGL - United Group*

Hi Ferret,

What did you think of today's guidance? Pretty poor result from the company one would think?

I always thought they would be prone to more weakness following the mid year - all seems evident now! The director purchases a while back seemed very token also.

As an aside - this result seemed to hit a lot of engineering and mining services today...


----------



## robusta (16 May 2013)

For what it is worth here are some broker views on UGL from Fnarena

http://finance.ninemsn.com.au/newscolumnists/other/8659873/its-getting-a-bit-ugly-for-ugl


----------



## VSntchr (16 May 2013)

For those of you who delve a little deeper into the valuation side of things - have you considered the impact that operating leases have on the valuation of UGL?

The expenses as of 2012 became quite substantial.
For 2012 the reported expense was $70m.
and then from the annual report:

Note 27: OPERATING LEASES
Non‑cancellable operating leases are payable as follows:
– not later than one year                                     $  81,316 
– later than one year but not later than five years    $ 160,037
– later than five years                                          $ 120,415 

Reclassifying these expenses (as we should) means that debt jumps by about $300m. To compensate pre-tax earnings are lifted by about $36m..

All-in-all the overall affect is negative on my valuation by a substantial amount...HOWEVER still leaves me thinking that this stock is now very cheap


----------



## Ves (16 May 2013)

VSntchr said:


> Reclassifying these expenses (as we should) means that debt jumps by about $300m.



Can you explain why you would do this?


----------



## VSntchr (16 May 2013)

Ves said:


> Can you explain why you would do this?




Accounting says that we should treat operating leases as 'operating expenses'. But wouldn't it be more realistic to classify them as 'financing expenses'?

My argument is that the benefits from the assets are usually going to be incurred over more than just the current period..


----------



## Ves (16 May 2013)

When I value a stock I'm trying to figure out a) how much free cash flow it generates and b) how much of this free cash flow can be retained and what return can the company re-invest this at and finally c) how much will be distributed.

Therefore, the cost of premises, in this case a lease obligation, is a cash expense that needs to be taken off before we can arrive at a free cash flow figure. 

Whatever the additional benefits of the lease to the business will show up in the FCF somewhere in future years.

I only count the lease obligations for ratios that have to do with leverage and debt / financing coverage and all that sort of jazz.


----------



## VSntchr (16 May 2013)

Fair enough.

I do it this way as I was taught that it provides a clearer measure of operating earnings - which is my first step in getting to FCFF..to each his own though..

Back to the valuations for me - plenty of work to do tonight, I'm loving all the market activity at the moment!


----------



## craft (16 May 2013)

robusta said:


> For what it is worth here are some broker views on UGL from Fnarena
> 
> http://finance.ninemsn.com.au/newscolumnists/other/8659873/its-getting-a-bit-ugly-for-ugl






> UGL Ltd , an engineering, mining operations and property maintenance conglomerate, has run into a perfect storm




Mmmmmm I've always loved a perfect storm.




> Over the past decade, UGL has grown from being a Western
> Australia-based resources construction business to become
> a diverse, multinational outsourced services company.




http://www.ugllimited.com/templates/pdf/UGLAnnualReport2012.pdf

Big picture - has any other Aus resource service company used the mining boom to diversify and broaden their business for an inevitable end to the boom more then UGL have?  Yes UGL has issues at the moment but they are far better placed then most to deal with the decline in mining investment. Let the creative destruction begin. I know who I'm interested in.


----------



## Ferret (16 May 2013)

*Re: UGL - United Group*



JTLP said:


> Hi Ferret,
> 
> What did you think of today's guidance? Pretty poor result from the company one would think?
> 
> ...




Hi JTLP,

Pretty disappointing.  A second downgrade relatively soon after the midyear is the sort of thing that makes me lose confidence in a company's management.

However, although the market is never wrong, I sense that the reaction might be overdone.  I'm not going to sell out, but I wouldn't consider buying any more until there is a pickup in sentiment for the whole mining services sector.  I'm starting to feel the whole sector is oversold.


----------



## So_Cynical (16 May 2013)

I figure someone should bang up a chart, have a bit of a look back...the last substantial low was the GFC low of Nov 2008, looks like around $6.70


 Aug 2008 shares on issue 164M so MC in Nov of around 1.1B 

Current SP $7.60


 May 2013 shares on issue 166.5M and MC of around 1.25B

Looks like UGL haven't done a cap raising in the last 6 years..solid dividend history, and the SP did a fast recovery to over $15 by Sept 09...however buy and hold after Oct/Sept 09 would not of worked out to well.
~


----------



## skc (16 May 2013)

craft said:


> Big picture - has any other Aus resource service company used the mining boom to diversify and broaden their business for an inevitable end to the boom more then UGL have?  Yes UGL has issues at the moment but they are far better placed then most to deal with the decline in mining investment. Let the creative destruction begin. I know who I'm interested in.




Fair point. But doesn't that simply position them as the least bad?

On their HY figures, property services was ~44% of group EBIT (before corporate costs). If you apply this same ratio to underlying NPAT of $51m, you get $22.5m NPAT. So full year ~$46-47m. UGL guidance is for ~$95m underlying NPAT. So since property services had $46m that leaves ~$49m to engineering.

So let's say property services demerges and gets a PE 15x. That's 15 x $46m = $700m say.
The engineering parts will probably trade at 8x. That's 8 x $49m = $390m.

Total $1090m market cap, compared to market cap today ~$1250m.

Doesn't jump out at me as oversold unless property services has much higher growth and/or attracts much higher valuation.


----------



## craft (17 May 2013)

skc said:


> Fair point. But doesn't that simply position them as the least bad?
> 
> On their HY figures, property services was ~44% of group EBIT (before corporate costs). If you apply this same ratio to underlying NPAT of $51m, you get $22.5m NPAT. So full year ~$46-47m. UGL guidance is for ~$95m underlying NPAT. So since property services had $46m that leaves ~$49m to engineering.
> 
> ...




Looking at international peers JLL & CBRE and discounting their valuations because DTZ isn’t quite at that scale yet I think property is worth at least 1 Billion in round numbers.

Today’s EV is 1.7 Billion. 

Is the rest worth .7 Billion?

The average ROA right back to 1994 is around 8%.  Assets ex property is about 1.2 B. Average year profit for the rest should be close to 100M. Get really pessimistic and knock that back by 30% and factor in no valuable growth and that still gives you a 10% yield.

This year’s 95M is not an average year – contract overruns and restructuring have hammered the result, it is not however a permanent shift in profitability in my view.  

Cheap enough for me to start accumulating with a long term view. And I can’t say that about much at the moment.

Hope your shorter term perspective prevails though and it continues to get hammered.


----------



## VSntchr (17 May 2013)

craft said:


> Hope your shorter term perspective prevails though and it continues to get hammered.




Quoted from 1987 Buffet Letter to Shareholders:


> Mr. Market has incurable emotional problems. At times he feels euphoric and can see only the favourable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.




Mining and associated services is experiencing a contraction, but surely for companies that are either carrying lots of cash, have a dominating market position, have a diversified revenue base or a combination of such factors – this can be seen as a positive in the long run. It is times like this that flush the weaker companies, leaving the stronger ones to mop up the leftovers and eventually strengthen their position.

It’s easy to get caught up thinking that this is the end for mining – but taking a medium-longer term view, the demand for products isn’t really diminishing to 0 is it. Stronger times will lie ahead, it’s just a matter of determining who’s going to be around to benefit – and what’s a fair price to pay for these companies.

UGL is not the only one I have in mind, there are a few other companies that have some of the above mentioned factors – however they aren’t cheap enough to get excited yet!


----------



## craft (17 May 2013)

VSntchr said:


> It’s easy to get caught up thinking that this is the end for mining – but taking a medium-longer term view, the demand for products isn’t really diminishing to 0 is it. Stronger times will lie ahead, it’s just a matter of determining who’s going to be around to benefit – and what’s a fair price to pay for these companies.
> 
> UGL is not the only one I have in mind, there are a few other companies that have some of the above mentioned factors – however they aren’t cheap enough to get excited yet!




Just to clarify my thoughts on UGL– My primary interest is not positioning yet for the type of mining services bottoming you describe here.

My interest predominantly lies in the international property business.


----------



## VSntchr (17 May 2013)

craft said:


> Just to clarify my thoughts on UGL– My primary interest is not positioning yet for the type of mining services bottoming you describe here.
> 
> My interest predominantly lies in the international property business.





As does mine.


----------



## odds-on (12 August 2013)

http://www.smh.com.au/business/earn...-slumps-ahead-of-demerger-20130812-2rqyx.html

Demerger planned for 2015. A lot can happen between now and then. Any thoughts?


----------



## Klogg (29 November 2013)

craft said:


> Looking at international peers JLL & CBRE and discounting their valuations because DTZ isn’t quite at that scale yet I think property is worth at least 1 Billion in round numbers.




I realise I'm bringing up an old post here, but I'm very curious....

@Craft - I followed your line of thinking and come up with roughly the same figures (mostly through peer comparison). However, the question I can't seem to answer is, how much comfort does a relative valuation really give?

Don't get me wrong, I've looked at the company many other ways - but I've only rarely used a relative valuation technique, and have only used it on companies that were much simpler/smaller... so I'm wondering how much weight to give this aspect of a valuation.

Thanks in advance.

(For what it's worth, this was done purely for educational purposes)


----------



## skc (29 November 2013)

Klogg said:


> I realise I'm bringing up an old post here, but I'm very curious....
> 
> @Craft - I followed your line of thinking and come up with roughly the same figures (mostly through peer comparison). However, the question I can't seem to answer is, how much comfort does a relative valuation really give?
> 
> ...




Be careful with earning multiples across different markets as well. The difference can stay that way for a long time. Here's some peer PE on ALL by UBS (completely industry but just to illustrate the point). 




It'd be hard to come up with a valuation using a PE multiple range between 13 - 28.


----------



## Klogg (29 November 2013)

skc said:


> Be careful with earning multiples across different markets as well. The difference can stay that way for a long time. Here's some peer PE on ALL by UBS (completely industry but just to illustrate the point).
> 
> View attachment 55603
> 
> ...




The gaming industry is very different and less dependent on the macro trend - but I take your point.
Thanks


----------



## So_Cynical (29 November 2013)

Keeping things simple, if we consider that there is a time to buy, a time to hold and a time to sell...what time is it now???

If i had some funds id be all over this....and that would probably be a premature entry.


----------



## Ves (30 November 2013)

Klogg,  FWIW,  I don't really value this using "Relative multiples" (Ie.  EV/EBIT,  P/E)  but mainly on my own assumptions as to the future economics of the business wrapped into a DCF valuation.

And really,  this is only long term thinking,  and you can think of it what you will....   that group EBIT will roughly double over the period to 2025.  I'm valuing the engineering business and the property services businesses separately and then subtracting corporate corporate level costs.  Probably need to do that to be ball park.

I already have a pretty large portfolio allocation to UGL at a price a fair bit higher than the current market price.... but I have left myself room in my portfolio rules to add to this when I feel that the market price is really attractive.  Starting to get closer to that.


----------



## Klogg (30 November 2013)

@So_Cynical - Appreciate the feedback, but I'm only really interested in valuation techniques and how this fits in. I'm no good at picking the bottom and will leave that to those who are.



Ves said:


> Klogg,  FWIW,  I don't really value this using "Relative multiples" (Ie.  EV/EBIT,  P/E)  but mainly on my own assumptions as to the future economics of the business wrapped into a DCF valuation.
> 
> And really,  this is only long term thinking,  and you can think of it what you will....   that group EBIT will roughly double over the period to 2025.  I'm valuing the engineering business and the property services businesses separately and then subtracting corporate corporate level costs.  Probably need to do that to be ball park.




This is the way I normally work. I usually look at a form of peer analysis, but not to get a relative valuation. Rather, this feeds me some info at a macro level and what the competitive landscape is for the company.

I guess this really answers my question though. The relative valuation alone seems to be a fairly weak bit of information, but I should be using it to backup any absolute valuation.

When I did my DCF calcs, I did use a similar technique to the one you mentioned. I don't have the figures next to me, so I don't know if my calculations were near yours, but the business definitely fell into the value bucket.

Thanks again Ves and skc. You guys have answered my last few questions.  
Appreciate it.


Edit: Ves - in your calculations, did you make any assumptions about the immediate (1-2year) future of the engineering business, especially around the cyclical nature of mining services?


----------



## Klogg (30 November 2013)

Klogg said:


> Edit: Ves - in your calculations, did you make any assumptions about the immediate (1-2year) future of the engineering business, especially around the cyclical nature of mining services?




To be more specific, did you assume a worst case scenario involving any further revenue loss in this area? I'm at a loss on how to actually model this... (although after a certain point in the valuation, it becomes somewhat negligible from what I'm seeing)

Apologies for the poor wording - just woke up! (and with a nasty hangover)


----------



## craft (30 November 2013)

Klogg said:


> However, the question I can't seem to answer is, how much comfort does a relative valuation really give?




Hi Klogg

For me the valuation that gives the most comfort is expected cash flows from the business - obviously to make that calculation I have to make assumptions. For anything to be a buy it has to pass that valuation test. If it does I will look at relative valuations to fill in a bit more of the picture and get a wider industry perspective, and hopefully assist in entry decisions, which in this case has not been the greatest and I’m currently underwater. I'm inclined to be a bit early on entries but the luxury of averaging in often helps. Way back in the NVT thread somewhere I posted something more extensive  about how I see the risks of entry and basically I'm happier to be too early than miss getting set as long as my absolute calculation indicates I will make my desired return long term.  

In reviewing things the property valuation multiples seem pretty stable - the engineering service multiples are still getting squeezed and UGL has had contract blowout issues of their own so they certainly won’t be immune to that. Nervous about more possible hand grenades on the engineering side but still like the property – separation time line looks like its pushing out though.


----------



## Klogg (30 November 2013)

craft said:


> In reviewing things the property valuation multiples seem pretty stable - the engineering service multiples are still getting squeezed and UGL has had contract blowout issues of their own so they certainly won’t be immune to that. Nervous about more possible hand grenades on the engineering side but still like the property – separation time line looks like its pushing out though.




It is the short-term engineering issues that I don't know how to accommodate (how much room for error do I allow). However, should there be no major cost blowouts, then there's very little uncertainty for me.

That does answer my questions though, and also tells me that I should consider historical valuation multiples of more than a few years... 

Thanks again for the help - especially since you don't actually get anything from it.


And for those that are interested, here is the section on entry points posted by Craft within the NVT thread:



> Once an opportunity is identified, there are two risks in relation to timing, one is buying too early, the other is missing out on the price that gives rise to the opportunity.
> 
> Buying too early means I suffer a few % points of opportunity cost over my envisaged time frame but I have at least locked in acceptable actual return. (so long as my assumptions were correct).
> 
> ...




skc - I was almost tempted to quote your joke as well. 


Anyway, time for me do a little more homework.


----------



## craft (1 December 2013)

Klogg said:


> It is the short-term engineering issues that I don't know how to accommodate (how much room for error do I allow). However, should there be no major cost blowouts, then there's very little uncertainty for me.




The crux of the matter and what is undoubtedly driving the market at the moment. 

When we last heard from UGL, the first two paragraphs were:



> The 2013 financial year saw difficult trading conditions adversely impact UGL’s financial performance
> following the escalation in the capital investment slowdown across the Australian resources and
> infrastructure sectors and a rigorous focus on cost management by the major miners.
> 
> ...




Since then FGE has gapped to the tune of 90% odd because of Power station contracts which I guess has helped push UGL price to within a whisker of 8+ year lows and posturing for a break of that support – perhaps massively on news.

Currently without a CEO for the engineering division because the last one had to step down due to alleged bribery whilst at Leightons.  

The Macro scene is being described as a Mining Investment Cliff.

Soooo Is it time to lean harder against the herd or turn and run with them?


----------



## odds-on (1 December 2013)

craft said:


> The crux of the matter and what is undoubtedly driving the market at the moment.
> 
> When we last heard from UGL, the first two paragraphs were:
> 
> ...




Hi Craft,

How do you see the demerger working out? It is planned for FY2015 and is subject to approvals (refer recent AGM presentation). I get the impression recent posters are keen to own the DTZ business but not the Engineering business. Surely it is best to wait for the demerger to happen, then purchase DTZ shares (assuming they are trading at an attractive valuation). There must be a risk that the demerger gets delayed, wrong management team gets appointed, corporate cost overruns and so on....

Cheers


----------



## Klogg (1 December 2013)

craft said:


> The Macro scene is being described as a Mining Investment Cliff.
> 
> Soooo Is it time to lean harder against the herd or turn and run with them?




I'd argue it's only partly contrary to the mainstream view... Going by recently reported earnings, if you adjust DTZ earnings for the one-off re-branding (all to DTZ), then you've got a situation where Engineering is a significantly smaller portion of overall earnings.

That being said, there's still the chance of short-term pain from Engineering - but all it has to do is have maintain flat-ish cash flow (through reduced Capex and cost reduction) over the next few years... by then DTZ will be an overwhelming portion of earnings and Engineering will be something on the size - should the macro trend in the property services space continue.

Probably worth mentioning that a reduction in debt and some cost reduction within Engineering is management's focus at the moment, so they're working toward that goal.





> Surely it is best to wait for the demerger to happen, then purchase DTZ shares (assuming they are trading at an attractive valuation)



@Oddson - I know you shot this question to Craft, but just to generate some discussion on the matter, here's my view:

If you were to wait for the demerger, by then you'll have two different sets of financials, forecasts, earnings, etc. and more importantly, you won't have a property services company masquerading as a Mining Services company, thus affecting the perception of the market. From what I can tell, the value of DTZ is hidden in the fact that it is attached to, and associated with, a company that has a very poor macro outlook.

And yes, there is a risk that the de-merger is delayed, but how does this change your part ownership in DTZ?


----------



## craft (1 December 2013)

odds-on said:


> Hi Craft,
> 
> How do you see the demerger working out? It is planned for FY2015 and is subject to approvals (refer recent AGM presentation). I get the impression recent posters are keen to own the DTZ business but not the Engineering business. Surely it is best to wait for the demerger to happen, then purchase DTZ shares (assuming they are trading at an attractive valuation). There must be a risk that the demerger gets delayed, wrong management team gets appointed, corporate cost overruns and so on....
> 
> Cheers




Hi Odds - on

As you would know with such a nick, the market is always doing its best to price the odds. If things turn out worse then the market expects then it will obviously be better to wait - If it turns out better then expected then waiting means forgoing the profit.

As investors we get paid for taking the risk that things turn out different to what they are currently priced for. I think UGL with DTZ tucked away inside is a risk priced attractively now. not sure how it will be priced when things become clearer.

The biggest risk to the timetable as I see it at the moment is that the engineering side of the business may need the property business strength and diversification for a bit longer then the timetable indicated.


----------



## craft (1 December 2013)

Klogg said:


> I'd argue it's only partly contrary to the mainstream view... Going by recently reported earnings, if you adjust DTZ earnings for the one-off re-branding (all to DTZ), then you've got a situation where Engineering is a significantly smaller portion of overall earnings.
> 
> That being said, there's still the chance of short-term pain from Engineering - but all it has to do is have maintain flat-ish cash flow (through reduced Capex and cost reduction) over the next few years... by then DTZ will be an overwhelming portion of earnings and Engineering will be something on the size - should the macro trend in the property services space continue.
> 
> Probably worth mentioning that a reduction in debt and some cost reduction within Engineering is management's focus at the moment, so they're working toward that goal.




Hi Klogg

Good to have your thoughts hopefully we will also get some other views. 



> Soooo Is it time to lean harder against the herd or turn and run with them?




My short answer to the question is that I'm happy to lean against the market at this point. More detailed reasoning  later.


----------



## skc (2 December 2013)

craft said:


> As investors we get paid for taking the risk that things turn out different to what they are currently priced for. I think UGL with DTZ tucked away inside is a risk priced attractively now. not sure how it will be priced when things become clearer.
> 
> The biggest risk to the timetable as I see it at the moment is that the engineering side of the business may need the property business strength and diversification for a bit longer then the timetable indicated.




Here's a bunch of broker comments on UGL... 

http://www.fnarena.com/dsp_recommendations.cfm?searchsymbol=ugl

I am not suggesting that these guys are correct (they are quite good at groupthink), but I think the probability is that they won't know how to value the property business immediately after the de-merger (or confirmation of such). 

I am also not a fan a Trevor Rowe... 

http://www.crikey.com.au/2009/08/05/trevor-rowe-meets-his-maker/



craft said:


> Hi Odds - on




I've always read Odd-Son. I am an idiot :bonk:


----------



## Klogg (2 December 2013)

Can I get anyone's thoughts on why Capex spend was so high last FY?

2013:
Eng + Ops/Maint ~52m
DTZ = ~48.5m

2012:
Eng + Ops/Maint ~45m
DTZ ~ 24m

I can understand the increase within Property Services, but why such a high capex spend within a business that is suffering cost blowouts? Is it due to the style of business they're winning within Engineering?

Unfortunately I can't provide my own opinion on this, but I can't find much within any recent announcements about it. Hoping someone has come across this in some form or another...


----------



## Klogg (2 December 2013)

Sorry, last line was meant to read:

Unfortunately I can't provide my own opinion on this, *because* I can't find much within any recent announcements about it. Hoping someone has come across this in some form or another...


----------



## Ves (2 December 2013)

Klogg said:


> @So_Cynical - Appreciate the feedback, but I'm only really interested in valuation techniques and how this fits in. I'm no good at picking the bottom and will leave that to those who are.
> 
> 
> 
> ...



Hi Klogg

Sorry to be slow in replying.   I’ve been doing a bit of thinking and procrastinating and juggling a few other things on the weekend…. Head hasn’t been completely around investing lately.

If I’ve done my job correctly in a DCF valuation I’ve spent time making plenty of assumptions on the future of the business that are “best guesses” on my perception and analysis of the information currently at hand.   I will use low-ball, super conservative figures on some companies as a rough guide.  But in companies with a fairly good competitive position it’s pretty much a waste of time because this line of thinking is most likely going to be so divergent from the underlying reality that unless the market is missing something really obvious you will never see a price low enough to match.

Back to UGL - when I say that EBIT could double by 2025 obviously I have no idea how accurate this is, but what I’m really talking about is what I think is the latent earning power hidden within the group using my best whole of cycle assumptions (and most of this obviously resides within the property sector, but engineering is probably closer to the bottom of the cycle than the top in my opinion.  I wouldn’t invest if I didn’t think there was much potential for them to employ incremental capital back into the business and increase cash flow over time. 

I’ve found that with valuations near term cash flows have a higher impact on the bottom line calculation in companies where you’re not able to forecast out very far and especially when there isn’t much in the way of growth in forecasted cash flow over time.  I find you are best when you just make the best assumptions possible (that sounds counter intuitive but if as investor I find that I need to make really conservative or low-ball assumptions about the future, and then I probably don’t have the confidence in the company’s prospects to hold it anyway).   If you’re valuing UGL at $2B, and the near term earnings are $200m lower than your forecast then that’s only 10%.

Where I really am probably more conservative is in the very distant future – ie. the terminal value.   I generally come up with a perpetuity calculation if there’s enough competitive advantage to warrant it.  I never bake in any growth (that’s just a bonus if it happens).  I also always find that I will play around the edges with the terminal value by multiplying it by a factor of less than 100% based on my confidence in whether or not they can maintain their competitive position and earnings power. Obviously if you think there’s no competitive advantage at all, then you’re just going to use a best estimate of the replacement cost of assets in the terminal value.  How much you go above this really is your feeling on how strong and enduring you think any competitive advantage will be by the time you reach the terminal value period  (whether it’s 5-10-20 years into the future).

I also generally ask for around 15%pa before tax return,  so the discount rate is fairly high.

Margin of safety obviously comes in there somewhere too…

Whilst future earnings hits to engineering earnings are definitely possible the contracts are pretty well diversified on a sector basis and there is a high amount of recurring revenue. I also think there enough scale that it would take a big hit to a project to do a large amount of damage to earnings (or equity like Forge).  There’s enough resilience built in for me to be able to hold my position with confidence through the current market down term and not be worried by the red figures on my screen.

I pretty much agree with you that the short and medium term earnings of engineering will most likely be flat, and that the property business will do most of the heavy lifting.

Re: the demerger,  agree that it’s probably better to buy when you see value, than to wait until there is clarity and risk that the value is no longer there.


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## Klogg (2 December 2013)

Ves,
Thanks again for your reply, and please don't apologise. Procrastination is my favourite pass-time 


Relating to a few points:



> But in companies with a fairly good competitive position it’s pretty much a waste of time because this line of thinking is most likely going to be so divergent from the underlying reality that unless the market is missing something really obvious you will never see a price low enough to match.




And this was my problem when I was initially going through the valuation process with UGL. I was applying the worst case scenario, adding a 10% buffer, then demanding a 30% MOS at the end of it. By the time I was done, you'd have to buy the company at 7-8 * P/E to fit the criteria... Now my job is to ensure I don't over-do it the other way. Although I'm quite certain I haven't.



> I pretty much agree with you that the short and medium term earnings of engineering will most likely be flat



In my calcs, I allowed for a decline in EBIT by 10% YoY for the next 3 years. Looking back, this doesn't really reflect reality, as there will either be a major blowout/contract loss, or nothing at all. Slowly losing business seems to me like it's the least likely scenario. 
I'm thinking of factoring in a major cost blowout and seeing how it effects my valuation - Just a question of what is realistic...

Finally, one last question. What's your reasoning behind not factoring in any growth? I do this in most cases, but given the nature/position of the DTZ business, it's extremely difficult to picture a no-growth situation.


----------



## craft (2 December 2013)

skc said:


> I am also not a fan a Trevor Rowe...



I hear you on this one.



skc said:


> Here's a bunch of broker comments on UGL...




This doesn't worry me so much - Normally have to be in disagreement with the broking consensus to get a price that is justifies my long term cash flow assumptions.



skc said:


> I've always read Odd-Son. I am an idiot :bonk:




Don't worry, me too - for a long time until he straightened me out.

......................


All dressed up in my finest chain mesh gloves but now where to go yet - does it look like it wants to break to you?


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## skc (2 December 2013)

craft said:


> This doesn't worry me so much - Normally have to be in disagreement with the broking consensus to get a price that is justifies my long term cash flow assumptions.




Not saying they are right, just saying their attitude will take time to change and I am willing to bet that they won't change fast enough to make the property business too dear overnight.



craft said:


> All dressed up in my finest chain mesh gloves but now where to go yet - does it look like it wants to break to you?




On the chart alone it sure looks like it wants to break down. They only held AGM on 29 Oct so you'd think that they will wait another few weeks before releasing any earth shattering left field news (if they exist). But if things get ugly then a cap raising will definitely be on. 

Apart from potential nasties from the engineering side, the other issue with jumping in now would be the uncertainty around capital structure of the two businesses. DTZ may have good prospects but if they load it up with too much debt (to ease the burden of the engineering side) then it may not be that awesome either.

The fact that they said the demerger will take over a year... you have to ask why so long? None of the reasonable guesses are good imo.

If I was really keen on this I'd make sure I have a parcel to secure the chance to participate in any cap raising. But when to buy the rest would be quite an art...


----------



## Ves (2 December 2013)

Klogg said:


> Finally, one last question. What's your reasoning behind not factoring in any growth? I do this in most cases, but given the nature/position of the DTZ business, it's extremely difficult to picture a no-growth situation.



With the comment on factoring in no growth - this relates to the terminal value / perpetuity calculation only (unless of course it's a mature / no growth business with lousy prospects).   

For the initial cash flow period, I will guesstimate the cashflows out for another cycle,  and include any increase in earnings power / profitability in calculating how much these will increase over that period. Obviously you don't want to include any growth that is achieved at the cost of capital or below.  There is most definitely profitable growth in this part of my valuation for DTZ. I'm usually loathe to go past then years in pretty much every case because it's just too far out for me to really feel comfortable in projecting future earnings power.

Then there's the terminal value.   This is always no growth for me - the cash flows at this point are very long-dated,  and as a conservative measure (read: admission by this point it's 10+ years and it's too hard) I refuse to pay a premium for carrying the risk that the company may not be able to pump excess capital into any form of competitive advantage by this point in time.  More than happy to pay for the company maintaining earnings power if I believe they will have a sustainable competitive advantage of degree by the end of my cash flow period (see my comment above in relation to the confidence factor that reduces the terminal value calculation).

More than anything look at it as risk management....  better to be surprised by upside than to pay for upside that never happens, especially if it's 10+ years away.


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## Klogg (2 December 2013)

Ah, that makes sense now.

Thanks so much. You have no idea how helpful this exercise, and your help (craft, skc, Ves), has been.

I think I'm out of questions now... haha.


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## VSntchr (2 December 2013)

Ves said:


> With the comment on factoring in no growth - this relates to the terminal value / perpetuity calculation only (unless of course it's a mature / no growth business with lousy prospects).
> 
> 
> Then there's the terminal value.   This is always no growth for me - the cash flows at this point are very long-dated,  and as a conservative measure (read: admission by this point it's 10+ years and it's too hard) I refuse to pay a premium for carrying the risk that the company may not be able to pump excess capital into any form of competitive advantage by this point in time.  *More than happy to pay for the company maintaining earnings power if I believe they will have a sustainable competitive advantage of degree by the end of my cash flow period* (see my comment above in relation to the confidence factor that reduces the terminal value calculation).




VES, when you talk about no growth and then talk about maintaining earnings power..I presume that you are referring to a business being able to maintain margins and increase revenue in-line with, but not above, inflation?
That is what I do in the large majority of the valuations I do..


----------



## tech/a (2 December 2013)

Another example of holding in hope that this or that may happen.
Technically its been and certainly looks to remain --- falling.


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## Ves (2 December 2013)

VSntchr said:


> VES, when you talk about no growth and then talk about maintaining earnings power..I presume that you are referring to a business being able to maintain margins and increase revenue in-line with, but not above, inflation?
> That is what I do in the large majority of the valuations I do..



I've been playing around with a few options in the last few months.

Basically I take the FCFF (or whichever you use) from the last period of your cash flow analysis and divide it by some sort of risk-adjusted cost of capital for the firm  (usually between 11% and 15%).

So say at year 10 you had cash flow of $1 a share and I thought the cost of capital should be 12% for UGL.  TV at year 10 would be $8.33.  Discounted back to year 0 at 15% (my required rate of return before tax) this'd be $2.06.   as I said I would personally adjust this based on my confidence in the enduring competitive advantage of the business.   So for instance....  $2.06 x 50% =  $1.03.    It's pretty arbitrary as all valuation is, but it makes you think about the competitive advantage and how far above the replacement cost of assets you are willing to pay for it in today's dollars.

Here's a comparison of the same for 5 different scenarios using $1 as the base earnings at year 10. Discount rate from year 10 to year 0 is always 15% in all scenarios.

Scenario	A 	 B	  C	   D	   E
TV Disc	11%	12%	13%	14%	15%
TV      	 $9.09 	 $8.33 	 $7.69 	 $7.14 	 $6.67 
Year 0 	 $2.25 	 $2.06 	 $1.90 	 $1.77 	 $1.65 

Scenario A is 36% higher than scenario E.   B is 25%,  C 15% and D 7%....  which demonstrates that discount rates impact the result pretty quickly.


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## odds-on (2 December 2013)

skc said:


> Not saying they are right, just saying their attitude will take time to change and I am willing to bet that they won't change fast enough to make the property business too dear overnight.
> 
> 
> 
> ...




Great post, skc. 

Craft, Klogg, this is what I would be worrying about if I was to take a position in UGL at the current price - there is a list of "known unknowns" to add to the usual DTZ/UGL business risk analysis. Some facts and a timeline would help. I do not have any experience of de-mergers to use as a reference, but I would not be surprised if it turns into a debacle (perhaps I am slightly biased by recent corporate announcements/governance in contracting-type businesses).

Cheers


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## Ves (2 December 2013)

I'm not planning on selling post-demerger (unless there's a business reason),  so the multiple re-pricing, if any, can take all the time in the world for all I care.  That's the beauty of not being a forced / planned seller, you harvest the cash flow not the market's assessment of the business.


----------



## odds-on (2 December 2013)

http://m.theaustralian.com.au/busin...-urge-to-demerge/story-e6frg916-1226619468369

Interesting reading...


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## tech/a (2 December 2013)

Ves said:


> I'm not planning on selling post-demerger (unless there's a business reason),  so the multiple re-pricing, if any, can take all the time in the world for all I care.  That's the beauty of not being a forced / planned seller, you harvest the cash flow not the market's assessment of the business.




At what price did you buy this stock?


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## craft (2 December 2013)

skc said:


> Not saying they are right, just saying their attitude will take time to change and I am willing to bet that they won't change fast enough to make the property business too dear overnight.




Yep speedy changes of mind is not the norm - price targets following the market price however is.  



skc said:


> Apart from potential nasties from the engineering side, the other issue with jumping in now would be the uncertainty around capital structure of the two businesses. DTZ may have good prospects but if they load it up with too much debt (to ease the burden of the engineering side) then it may not be that awesome either.




I would welcome a capital raising to get the structures in order with the proviso its a proportional rights issue. A placement and SPP would probably change my mind on the whole investment.


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## skc (2 December 2013)

craft said:


> I would welcome a capital raising to get the structures in order with the proviso its a proportional rights issue. A placement and SPP would probably change my mind on the whole investment.




Hopefully proportional rights issue with additional take up. 

May be one way to play this is to short the engineering sector (say some selection DOW/BKN/MND/LEI/WOR) along with a long in UGL as a partial hedge. Won't be perfect and won't really hedge against a major blowup event.

I better spend more time studying the property segment given how willing you seem to accept the risk on the other dog.


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## tech/a (3 December 2013)

skc said:


> Hopefully proportional rights issue with additional take up.
> 
> May be one way to play this is to short the engineering sector (say some selection DOW/BKN/MND/LEI/WOR) along with a long in UGL as a partial hedge. Won't be perfect and won't really hedge against a major blowup event.
> 
> I better spend more time studying the property segment given how willing you seem to accept the risk on the other dog.




How do you weight a trade like that?


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## craft (3 December 2013)

skc said:


> risk on the other dog.




The price on even this risk in isolation is starting to look O.K t me.



> Engineering is a market leader in Australia and New Zealand providing engineering, construction and
> maintenance services with revenue in excess of $2.3 billion. The business has a broad end-market
> exposure across multiple sectors which provide essential services including power, water,
> transportation, resources and defence.
> ...





Also a decent proportion of the engineering business is exposed to passenger rail which marches to a somewhat different Macro beat. (not to mention the diversification from property)

The company is big enough to be able to obtain debt funding outside the banks as evidenced by their US notes issue.

Contract Blow-ups for UGL are profit issues not business viability issues. Contractors financial ability to deliver is critical  in awarding contracts - a lot of the smaller competitors already have a large cloud over their head for future contracts.


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## craft (3 December 2013)

Whilst I'm cutting and pasting - here's a bit on DTZ.



> While this slide provides a snapshot of DTZ today, the company has a proud history of advising
> clients for nearly 230 years with its beginnings in the UK in 1784.
> 
> *Today, DTZ is a leading integrated global property services company which is becoming one of the
> ...




Even if your not into a valuation style of investing a simple comparison with its international peers on metrics as simple as price /Revenue or price/EBITDA should tell you something.

UGL's total EV at the moment is approx. 1.65 Billon.


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## craft (3 December 2013)

Klogg said:


> Can I get anyone's thoughts on why Capex spend was so high last FY?
> 
> 2013:
> Eng + Ops/Maint ~52m
> ...




Klogg

A lot of that capex figure has been capitalised which would indicate its growth capex. I have seen mention of Software costs for DTZ that explains the 'software under development' being capitalised in intangibles but nothing to explain the 'development costs' or 'project establishment costs' which are being capitalised. Without an explanation its hard to know if this is legit spending for future income growth or creative accounting (Hmmm flag). Deciphering between maintenance capex and growth capex is a bit of an art. Looking at depreciation costs and historical capex to revnue ratios gives some insight.


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## Ves (3 December 2013)

craft said:


> Klogg
> 
> A lot of that capex figure has been capitalised which would indicate its growth capex. I have seen mention of Software costs for DTZ that explains the 'software under development' being capitalised in intangibles but nothing to explain the 'development costs' or 'project establishment costs' which are being capitalised. Without an explanation its hard to know if this is legit spending for future income growth or creative accounting (Hmmm flag). Deciphering between maintenance capex and growth capex is a bit of an art. Looking at depreciation costs and historical capex to revnue ratios gives some insight.



DTZ upgraded their software platform - it is described in the 2013 results preso as "completion of the roll-out of market leading global IT platform."


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## craft (4 December 2013)

skc said:


> On the chart alone it sure looks like it wants to break down.




Looks like its starting to give it a shake.  Hopefully it will get on with it because despite all the good advice I'm adding some more (sticking to my plan) but don't have much time left before heading off travelling.


On returning - UGL is probably the first stock price I will look at to see how much of a spanking it has handed too me - (I think that means something about my confidence in it for the short term).

Catch you all next year.


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## skc (4 December 2013)

craft said:


> Looks like its starting to give it a shake.  Hopefully it will get on with it because despite all the good advice I'm adding some more (sticking to my plan) but don't have much time left before heading off travelling.
> 
> On returning - UGL is probably the first stock price I will look at to see how much of a spanking it has handed too me - (I think that means something about my confidence in it for the short term).
> 
> Catch you all next year.




I have a small short on UGL at the moment but probably won't hold it more than a few days.

Have a great trip.


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## craft (4 December 2013)

skc said:


> I have a small short on UGL at the moment




Great - now I'm going to go into cyber isolation and have nightmares that skc was on the other side


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## McLovin (16 December 2013)

Any reason for the 9% rise today or someone just spreading Christmas cheer?


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## Klogg (16 December 2013)

McLovin said:


> Any reason for the 9% rise today or someone just spreading Christmas cheer?




None that I can see... It just seems that MND and UGL had a dream run for no apparent reason.
Short covering before holidays? (stealing SKCs idea from another thread)


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## skc (16 December 2013)

Klogg said:


> None that I can see... It just seems that MND and UGL had a dream run for no apparent reason.
> Short covering before holidays? (stealing SKCs idea from another thread)






McLovin said:


> Any reason for the 9% rise today or someone just spreading Christmas cheer?




Still scratching my head on this one. The buying was very consistent through the day. Names that went 7%+ included UGL, WOR, MND, BLY, BKN. 

My guess is some fund doing a bit of short covering before going on holiday. There were some buying in the well shorted retail names as well.


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## pixel (16 December 2013)

skc said:


> Still scratching my head on this one. The buying was very consistent through the day. Names that went 7%+ included UGL, WOR, MND, BLY, BKN.
> 
> My guess is some fund doing a bit of short covering before going on holiday. There were some buying in the well shorted retail names as well.




It could be the lead to a recovery of mining and mining support stocks.
If we assume that the recent sell-off around the Globe has been overdone - Europe is currently up in the order of 1% - then it stands to reason that our market should follow. I bought ASL and WOR, and added UGL and DCG to my watchlists.

About UGL: It showed up on my scans today -





The weekly chart suggests some more work needs to be done, but the potential exists for a double bottom to develop:


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## pixel (22 January 2014)

Quite by accident, I hit the "M" button today and got the Monthly chart. That's when I found that the current Low matched the Low back in 2008. Some investors have looooong memories, and it's therefore possible that sellers have dried up because of this echo from the past.

Sure, the weekly chart has UGL still in an UGLy downtrend.




... but the Daily suggests a rebound after pullback.




I don't hold just yet, but have added it to my watchlist.


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## ROE (17 February 2014)

Australian paper has an article from its former CEO of dtz division accusing UGL is cooking the book
Hmmm
http://www.theaustralian.com.au/bus...books/story-fn91v9q3-1226828782946#mm-premium


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## craft (17 February 2014)

ROE said:


> Australian paper has an article from its former CEO of dtz division accusing UGL is cooking the book
> Hmmm
> http://www.theaustralian.com.au/bus...books/story-fn91v9q3-1226828782946#mm-premium




The investment case for this one still has merit I think, But I have lost conviction so am scaling my position right back. The allegations, the staff/director changes, the latest report makes me think watching from the outside may be more prudent.

Management have acknowledged third party interest in DTZ - If they go that course I might miss a quick profit by getting out - but the possibility that I don't get good allocation to DTZ also invalidates my long term reason for staying.


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## Klogg (17 February 2014)

craft said:


> The investment case for this one still has merit I think, But I have lost conviction so am scaling my position right back. The allegations, the staff/director changes, the latest report makes me think watching from the outside may be more prudent.
> 
> Management have acknowledged third party interest in DTZ - If they go that course I might miss a quick profit by getting out - but the possibility that I don't get good allocation to DTZ also invalidates my long term reason for staying.




The investment case has more merit now than before based on third party interests, as there is potential to sell DTZ and return this money to shareholders - provided they sell it at something close to your valuation. 
However, you could argue you'd rather own the business than receive 'fair value' for it now.


That said, I sold out of the small position I had in UGL based on the accusation of fraud alone. If this were even partially true, any 3rd party interest, along with my valuation of DTZ would be threatened.

Funnily enough this started as a learning exercise on valuation based on DCF, but I'll soon also learn whether or not I reacted correctly to the 'cooking the books' accusation. Erred on the side of caution in this case, simply because I don't know any better...


----------



## craft (17 February 2014)

Klogg said:


> The investment case has more merit now than before based on third party interests, as there is potential to sell DTZ and return this money to shareholders - provided they sell it at something close to your valuation.
> However, you could argue you'd rather own the business than receive 'fair value' for it now.




I would argue that strongly.   Closing of the discount is just a one off – the market will close the valuation gap anyway over time if the company does well.  The importance of the discount being unwound pails into insignificance to the return that can be generated from a good business.

The discount gives you a better return against what the business will eventually do and it gives you some downside protection – but the unwinding of the discount is not a big deal to me – if it comes about by a change of control transaction and means lose of exposure to a good long term business, that can be quite detrimental to long term success even if it comes with a nice short term sugar hit profit.




Klogg said:


> That said, I sold out of the small position I had in UGL based on the accusation of fraud alone. If this were even partially true, any 3rd party interest, along with my valuation of DTZ would be threatened.
> 
> Funnily enough this started as a learning exercise on valuation based on DCF, but I'll soon also learn whether or not I reacted correctly to the 'cooking the books' accusation. Erred on the side of caution in this case, simply because I don't know any better...




I probably wouldn’t normally put much weight on former employee allegations though in this case I am a bit unnerved by the timing proximity to Robert Denham’s departure – I had been pondering his leaving since it was announced.



> "We will be vigorously defending these, and believe they will be most likely thrown out at summary judgment stage, given there is no evidence around Mr Shibuya's allegations. Given UGL values its integrity and reputation very highly, it is actively examining potential counter-claims against Mr Shibuya and we intend to pursue these vigorously," it said.



_from Australian article._

Counter claim to protect its integrity and reputation? – Me thinks they protest too much – somebody who actually has integrity and Reputation vary rarely needs lawyers to prove it.


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## Ves (17 February 2014)

craft said:


> I would argue that strongly.   Closing of the discount is just a one off – the market will close the valuation gap anyway over time if the company does well.  The importance of the discount being unwound pails into insignificance to the return that can be generated from a good business.



Even worse - the door gets slammed in your face and you're presented with a valuation gap that is never filled because management let go of it at a less than ideal price to the private equity sharks circling in the name of "doing a deal."

That's my biggest fear after reading the rumours in the last few weeks,  and probably something I should have considered in the first place.  You live and learn - not budging, but willing to admit it hasn't worked out like I thought,  there's more balls in the air than first seemed,  and the jugglers are looking twitchy.

My opinion on DTZ is unchanged,  but not being able to take advantage of its future returns compounded would be very, very disappointing.


----------



## skc (17 February 2014)

craft said:


> I would argue that strongly.   Closing of the discount is just a one off – the market will close the valuation gap anyway over time if the company does well.  The importance of the discount being unwound pails into insignificance to the return that can be generated from a good business.
> 
> The discount gives you a better return against what the business will eventually do and it gives you some downside protection – but the unwinding of the discount is not a big deal to me – if it comes about by a change of control transaction and means lose of exposure to a good long term business, that can be quite detrimental to long term success even if it comes with a nice short term sugar hit profit.




I think there's also the issue of management incentives as well. I think it's entirely possible that they'd sell DTZ with the aim of propping up engineering. So not only you don't get to hold a good business over the long term, you don't even get the one-off dscount-closing value in your hands (UGL does, not shareholders).



craft said:


> I probably wouldn’t normally put much weight on former employee allegations though in this case I am a bit unnerved by the timing proximity to Robert Denham’s departure – I had been pondering his leaving since it was announced.




Yes the timing definitely was suspicious. Also remember... filing a lawsuit against former employer is a huge risk to anyone as it can amount to career suicide, especially for a senior executive. So not something you'd do for fun and there'd be some grains of truth in the allegations you'd think. Having said that... there's a lot of grey between cooking the book and massaging the financials. Every management will do something along those lines before putting the business up for sale.


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## craft (17 February 2014)

Ves said:


> You live and learn - not budging, but willing to admit it hasn't worked out like I thought.


----------



## Ves (17 February 2014)

craft said:


>



It means I'm not selling.


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## craft (17 February 2014)

Ves said:


> It means I'm not selling.




I figured that - it just seemed contradictory to the rest of the line, trying to get you to flesh out that contradiction. Why you still hold your conviction despite saying that it hasn't worked out as you expected.

I certainly still see an investment case for UGL, but it is a failed investment for me because I have lost conviction in the investment case. 

Do you still have conviction or are you being stubborn?_ (maybe there's no difference?)_
Ves you know Its only because I respect you that I ask such a blunt question.


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## McLovin (17 February 2014)

Sold out this morning. I've been umming and ahhing over what to do with UGL and these allegations were the "excuse" I was looking for to get out. The engineering business holds very little interest for me, and it seems increasingly likely they will go down the trade sale/private equity route for the jewel.



			
				craft said:
			
		

> this case I am a bit unnerved by the timing proximity to Robert Denham’s departure – I had been pondering his leaving since it was announced.




That makes two. He has an excellent record in business, and given his departure and now today's news you can't help but think there's something in the allegations.


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## ROE (17 February 2014)

I was waiting for cheaper price for a trade but now this so I stay out all together ...
When there is smoke there got to be a little fire some where...


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## odds-on (17 February 2014)

ROE said:


> I was waiting for cheaper price for a trade but now this so I stay out all together ...
> When there is smoke there got to be a little fire some where...




"There's never just one cockroach in the kitchen" 

Agree this is the time to wait. This should be good entertainment, I was worried I would get bored after FGE. Hopefully we will see some strong downward pressure on the price. Might be a nice short term trade in it.


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## Ves (17 February 2014)

craft said:


> I figured that - it just seemed contradictory to the rest of the line, trying to get you to flesh out that contradiction. Why you still hold your conviction despite saying that it hasn't worked out as you expected.



What I meant by "it hasn't worked out as I expected" is that there are a lot of variables / dynamics / management issues etc.   that I hadn't considered in enough depth in the first place or have come out of left field since.   I'll also elaborate by saying that it turns out that it is a much harder investment to keep track to which I am usually accustomed to favouring.... this wasn't expected either, it feels at times as if it constantly needs to be monitored which isn't ideal psychologically as it's easier to suffer from information overload / constant second guessing.  There are many more variables that affect their profitability and the future outcomes of the investment than I initially anticipated.   That's something I will definitely learn from having seen it evolve in real time.

What I'm not saying is that I believe my investment thesis (DTZ mostly) is broken.  

However,  certain events have come to the fore that *may* exclude me from participating in that investment thesis as a long-term hold. (ie. the chance that there is a major reduction in my investment time horizon because of a forced selling of my holding and possibly at a disagreeable price).



> Do you still have conviction or are you being stubborn?_ (maybe there's no difference?)_
> Ves you know Its only because I respect you that I ask such a blunt question.



Appreciate it now that I understand what you were trying to ask.   I've answered that question as best as I can above.   To some maybe there is no difference, it's open to interpretation more than anything.

All I can say is this:   do I feel as comfortable or more comfortable holding than I did 12 months ago?  No - but I don't think my conviction (or pain threshold) has deteriorated enough to make the sell call.


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## ROE (17 February 2014)

odds-on said:


> "There's never just one cockroach in the kitchen"
> 
> Agree this is the time to wait. This should be good entertainment, I was worried I would get bored after FGE. Hopefully we will see some strong downward pressure on the price. Might be a nice short term trade in it.




There are crooks every where but Japanese culture emphasis a lot on honour and this dude is a Japanese so that food for thought for me enough to think twice.


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## craft (19 February 2014)

McLovin said:


> and it seems increasingly likely they will go down the trade sale/private equity route for the jewel.




I'm wondering if/suspecting ASX listing rule 11.2 will mean any trade sale will have to go to shareholders for a vote.

USB is a substantial shareholder and has been making noises that their number for DTZ is 1.5Billion. Allen Gray and Janus Capital are both there with nearly 10% each and are certainly no fools in this type of investing. So shareholders probably have a big enough block to control management.

Notice Blackrock is also on the register with ~ 7% so you would think they are one of the Private equity bidders.

Lost my investment conviction but after sitting on the outside for a bit to clear the head I went back in on a trading basis - It just didn't want to go on with new lows.


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## odds-on (19 February 2014)

craft said:


> I'm wondering if/suspecting ASX listing rule 11.2 will mean any trade sale will have to go to shareholders for a vote.
> 
> USB is a substantial shareholder and has been making noises that their number for DTZ is 1.5Billion. Allen Gray and Janus Capital are both there with nearly 10% each and are certainly no fools in this type of investing. So shareholders probably have a big enough block to control management.
> 
> ...




Hi Craft,

http://www.smh.com.au/business/ugl-boss-denies-blowing-the-place-up-20140217-32wd2.html

See article. Apparently Legg Mason own UGL stock, their analyst reckons DTZ is worth $1.3-1.5 billion. Suspect the pressure is going to be applied to get the DTZ deal done. 

Cheers


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## ROE (19 February 2014)

lot of brokers reckon if it cant get DTZ deal done soon it need capital raising.
Freeze dividend and conserve cash seem they maybe under a bit of pressure with cash flow and capital.


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## McLovin (19 February 2014)

craft said:


> I'm wondering if/suspecting ASX listing rule 11.2 will mean any trade sale will have to go to shareholders for a vote.




You're could be right, I guess it depends how one defines "main undertaking".

I'll probably end up missing out, but I think I'd be happy with the self-discipline. Which probably makes no sense!


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## craft (19 February 2014)

McLovin said:


> I'll probably end up missing out, but I think I'd be happy with the self-discipline. Which probably makes no sense!




Makes lots of sense - probably something for me to think about 

Position sizing for a trade as compared to a conviction investment is way smaller and regardless of the outcome Reality is I'm probably better off spending any time consumed by trading UGL in finding a new investment opportunity.


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## McLovin (3 April 2014)

I've been rolling this around in my head for a couple of days. What do you think the engineering business is worth? I'm actually not seeing much upside if a deal is done $1.3b. If you assign a value to the engineering business of ~$650m (which is based on a more normal EBIT) then the valuation right now looks pretty full.

This is of course based on the presumption that DTZ is sold. I guess what I'm saying is that Street Talk seems to be getting fed info that indicates the sale price will be at the low end. If, as craft suggested above, shareholders need to vote then I doubt they'd agree. Which may explain the sp strength


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## Ves (3 April 2014)

McLovin said:


> I've been rolling this around in my head for a couple of days. What do you think the engineering business is worth? I'm actually not seeing much upside if a deal is done $1.3b. If you assign a value to the engineering business of ~$650m (which is based on a more normal EBIT) then the valuation right now looks pretty full.
> 
> This is of course based on the presumption that DTZ is sold. I guess what I'm saying is that Street Talk seems to be getting fed info that indicates the sale price will be at the low end. If, as craft suggested above, shareholders need to vote then I doubt they'd agree. Which may explain the sp strength



You could probably make a reasonable argument for anything in the following range:

Low-end

UGL Eng  $600m
DTZ   $1B
Net Debt  ($662m)

Equity  $938m

Around $5.60 per share

High-end

UGL Eng  $1B
DTZ $1.5B
Net Debt ($662m)

Equity $1.838m

Around $11 per share


Market is probably pricing it towards the low-end because there is talk / rumour of DTZ being sold on the cheap to private equity without much say from shareholders  (ie. no benefit of compounding long-term),  and the mean earnings of the Engineering business going forward are being priced at or below this year's estimates.


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## McLovin (3 April 2014)

Ves said:


> You could probably make a reasonable argument for anything in the following range:
> 
> Low-end
> 
> ...




Cheers, Ves

I really lost interest in this when it looked like a trade sale was what was going to happen with DTZ. But all these fundies getting on board leads me to believe that the trade sale might not end up happening and a distribution to shareholders might be the end result.


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## skc (3 April 2014)

McLovin said:


> I've been rolling this around in my head for a couple of days. What do you think the engineering business is worth? I'm actually not seeing much upside if a deal is done $1.3b. If you assign a value to the engineering business of ~$650m (which is based on a more normal EBIT) then the valuation right now looks pretty full.




That's the same conclusion I reached. 



McLovin said:


> This is of course based on the presumption that DTZ is sold. I guess what I'm saying is that Street Talk seems to be getting fed info that indicates the sale price will be at the low end. If, as craft suggested above, shareholders need to vote then I doubt they'd agree.




This process has been dragging on for some time. I wonder if they've been to the major insto holders and get a sense of whether such a deal will be supported. 



McLovin said:


> Which may explain the sp strength




There's always the question of what they plan to do with the proceed. Chances are there'd be a combination of capital return and special dividend (if they have franking credits). The market seems to like that on most occassions... perhaps forgeting sometimes that "Sheep's wool comes off the sheep's back".

http://www.sacu.org/proverb16.html


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## Ves (3 April 2014)

McLovin said:


> Cheers, Ves
> 
> I really lost interest in this when it looked like a trade sale was what was going to happen with DTZ. But all these fundies getting on board leads me to believe that the trade sale might not end up happening and a distribution to shareholders might be the end result.



It's a bit of a rock and a hard place situation for those (like me) who continue to hold.   I don't see it going much lower than $6-$6.50,  but there's a big risk that the upside would be limited in the case that you become a forced seller.  The demerger and the continued exposure to DTZ (in its own separate listed ASX entity) is the ideal scenario.


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## McLovin (3 April 2014)

skc said:


> The market seems to like that on most occassions... perhaps forgeting sometimes that "Sheep's wool comes off the sheep's back".
> 
> http://www.sacu.org/proverb16.html




I like that. I might use the Chinese version to really sound intelligent.



Ves said:


> It's a bit of a rock and a hard place situation for those (like me) who continue to hold.   I don't see it going much lower than $6-$6.50,  but there's a big risk that the upside would be limited in the case that you become a forced seller.  The demerger and the continued exposure to DTZ (in its own separate listed ASX entity) is the ideal scenario.




Yeah there doesn't seem to be much downside but equally there isn't much to the upside if the numbers $1.3-$1.4b prove to be where a deal is done. That's what has kind of made it unattractive to me. Short-term there won't be a pop in the SP if the deal is done and long term the compounding of DTZ will be gone.

There is of course the third possibility that if PE if rebuffed by shareholders, they might lob a bid in for the entire company.


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## craft (16 June 2014)

UGL sells DTZ for net proceeds of about 1 Billion. From my perspective that’s a poor outcome for shareholders. 

Are major shareholders on board?  Given who they are I find it a little surprising unless they have been privy to a little ‘special’ insight. 

If all the debt was now cleared that would leave around 250M of proceeds free so market seems pretty steady post sale in valuing contracting at ~ 900M ??


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## skc (16 June 2014)

craft said:


> UGL sells DTZ for net proceeds of about 1 Billion. From my perspective that’s a poor outcome for shareholders.
> 
> Are major shareholders on board?  Given who they are I find it a little surprising unless they have been privy to a little ‘special’ insight.
> 
> If all the debt was now cleared that would leave around 250M of proceeds free so market seems pretty steady post sale in valuing contracting at ~ 900M ??




Engineering EBIT was $36m in H1. Allowing for say $6-8m of corporate overhead, the engineering division should have EBIT ~$60m a year. Assuming interest = $0 as all debt is repaid, NPAT ~$42m. With the sector the way it is, the valuation seems a bit high imo.


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## craft (16 June 2014)

skc said:


> Engineering EBIT was $36m in H1. Allowing for say $6-8m of corporate overhead, the engineering division should have EBIT ~$60m a year. Assuming interest = $0 as all debt is repaid, NPAT ~$42m. With the sector the way it is, the valuation seems a bit high imo.




Yer I thought it was a being offered a bit more generosity then extended to other pure contractors at the moment.

Although it will have one of the more robust earning streams and a clean balance sheet. But then potential for hand grenades has too  exist until the industry adjusts to new growth rates.


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## skc (16 June 2014)

craft said:


> Yer I thought it was a being offered a bit more generosity then extended to other pure contractors at the moment.
> 
> Although it will have one of the more robust earning streams and a clean balance sheet. But then potential for hand grenades has too  exist until the industry adjusts to new growth rates.




At 31 Dec 2013, UGL had $123m of cash and $780 in debt. You would think something like $200-250m in debt could/should stay on the balance sheet. So with $1B net proceed they can potentially do a $500m capital management with a combination of buyback (not that their share is undervalued) or capital return. That's almost $3 per share and it's the only reason I can think of that's supporting the current valuation.

They've been mulling the sale of DTZ for over a year, and they couldn't even announce today what they plan to do with the proceed? It's almost like the management wanted to see what the market reaction was like before deciding what is the final capital structure of the firm. It wouldn't surprise me to see a big "sell the fact" day when the capital management decision is announced.


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## McLovin (17 June 2014)

This really looks like a dud deal for UGL shareholders. DTZ is growing quickly and over time will probably also get a multiple re-rating to some of its larger peers. TPG just need to hang on to it for a few years let it grow and then IPO it in the US. It should have been spun off IMO.


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## Ves (17 June 2014)

McLovin said:


> This really looks like a dud deal for UGL shareholders. DTZ is growing quickly and over time will probably also get a multiple re-rating to some of its larger peers. TPG just need to hang on to it for a few years let it grow and then IPO it in the US. It should have been spun off IMO.



If the media rumours are correct,  and they actually do plan to use the proceeds to purchase another engineering business,  for instance parts of John Holland or Tenix,  then they have effectively swapped a business like DTZ with fairly stable and growing earnings to which they can deploy excess FCF,  to another highly cyclical,  unpredictable business with little earnings visibility and higher capital requirements.  That would be the height of stupidity.


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## McLovin (8 October 2014)

McLovin said:


> That makes two. He has an excellent record in business, and given his departure and now today's news you can't help but think there's something in the allegations.




Oh hello! This could be worse than cooking the books.



> Corporate services group UGL paid Hong Kong’s embattled chief executive CY Leung, millions in secret fees in return for his support for its Asian business ambitions.
> 
> The arrangement is outlined in a secret contract dated December 2, 2011, before Mr Leung was elected chief executive. In the contract UGL agreed to pay the Beijing-backed politician £4 million pounds (about $7 million).




Even worse...



> Mr Leung was a director and shareholder of DTZ and was chief executive of its Hong Kong and Chinese operations. *The payments were made in two instalments*, *in 2012 and 2013, during his term as after he became Hong Kong’s top official.*




This could get very serious.

http://www.afr.com/p/national/ugl_paid_hk_chief_millions_in_secret_PIa0RgKyQY6dtvBKTEeSVP


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## skc (8 October 2014)

McLovin said:


> Oh hello! This could be worse than cooking the books.
> 
> Even worse...
> 
> ...




Hmm... very interesting.

The protesters in HK are demanding the resignation of CY Leung. This is quite a convenient excuse for Beijing to use if they want to get rid of him. Eventhough Beijing has been very supportive of Leung and unwilling to listen to the protestor's demand, one can't help but wonder about the perfect timing.


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## skc (31 October 2014)

skc said:


> At 31 Dec 2013, UGL had $123m of cash and $780 in debt. You would think something like $200-250m in debt could/should stay on the balance sheet. So with $1B net proceed they can potentially do a $500m capital management with a combination of buyback (not that their share is undervalued) or capital return. That's *almost $3 per share *and it's the only reason I can think of that's supporting the current valuation.




UGL announces a $3 per share capital return...


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## skc (6 November 2014)

Another day, another dodgy thing done by UGL. Shares fell 15% today on the back of a cost blowout on the Ichthys LNG project. The crazy thing is, UGL's joint venture partner, CH2M Hill, already warned their own shareholders about possible provisions 3 months ago. Whereas UGL decided that it's not worth disclosing. It only held its AGM last week.

To rub salt into shareholders' wound, UGL also decided that the writedown is not important enough for its own announcement. So it was buried at the back of a capital return announcement. Very poor form.

http://www.smh.com.au/business/mini...n-power-plant-at-ichthys-20141106-11i4ar.html


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## ROE (6 November 2014)

skc said:


> Another day, another dodgy thing done by UGL. Shares fell 15% today on the back of a cost blowout on the Ichthys LNG project. The crazy thing is, UGL's joint venture partner, CH2M Hill, already warned their own shareholders about possible provisions 3 months ago. Whereas UGL decided that it's not worth disclosing. It only held its AGM last week.
> 
> To rub salt into shareholders' wound, UGL also decided that the writedown is not important enough for its own announcement. So it was buried at the back of a capital return announcement. Very poor form.
> 
> http://www.smh.com.au/business/mini...n-power-plant-at-ichthys-20141106-11i4ar.html




you lucky getting $3 capital return it could have been worse they could wasted it on some silly acquisition 
dont have any or hold any


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## McLovin (7 November 2014)

skc said:


> Another day, another dodgy thing done by UGL. Shares fell 15% today on the back of a cost blowout on the Ichthys LNG project. The crazy thing is, UGL's joint venture partner, CH2M Hill, already warned their own shareholders about possible provisions 3 months ago. Whereas UGL decided that it's not worth disclosing. It only held its AGM last week.
> 
> To rub salt into shareholders' wound, UGL also decided that the writedown is not important enough for its own announcement. So it was buried at the back of a capital return announcement. Very poor form.
> 
> http://www.smh.com.au/business/mini...n-power-plant-at-ichthys-20141106-11i4ar.html




UGL has some terrible corporate governance issues. Way back in this thread somewhere someone posted about their reputation in the industry as being a bunch of cowboys. With DTZ gone, I can't see any reason why you'd want to own this business. It's just too hard.

Down another 8% today.


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## Miner (17 November 2014)

UGL gave away about $3 per share and tomorrow it will be quoted X CC. So would the share be dumped tomorrow ? Common sense says yes but how much.
I had great respect for UGL but there are years since I knew the company technically not as a share holder.
All symptoms of UGL are reminding me FGE  I lost a fortune there. 
Will wait to see market reaction tomorrow when it opens for trade


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## skc (18 November 2014)

Miner said:


> UGL gave away about $3 per share and tomorrow it will be quoted X CC. *So would the share be dumped tomorrow ? *Common sense says yes but how much.




All else being equal, it will open $3 lower than it closed today. The vast majority of holders are prepared to hold for the capital return, so there's little reason, in the absence of new news, to dump on Ex-date.


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## Miner (18 November 2014)

skc said:


> All else being equal, it will open $3 lower than it closed today. The vast majority of holders are prepared to hold for the capital return, so there's little reason, in the absence of new news, to dump on Ex-date.




Ditto.
What is a sheer coincidence that FGE burnt because of power project and looks like UGL is getting hammered for a power project too. The common theme between these two (one gone) is lack of competency and business acumen to manage power project. It does need more brain than running a simple fabrication and cranage project.


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## VSntchr (18 November 2014)

McLovin said:


> UGL has some terrible corporate governance issues. Way back in this thread somewhere someone posted about their reputation in the industry as being a bunch of cowboys. With DTZ gone, I can't see any reason why you'd want to own this business. It's just too hard.
> 
> Down another 8% today.




Yeah I agree. With capital management done and the best part of the group sold off, plus some uncertainties and dodgyness of management thrown into the mix...its hard to find reasons to be invested here...! 

Not to mention the general industry conditions!!!!


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## Ves (18 November 2014)

VSntchr said:


> Yeah I agree. With capital management done and the best part of the group sold off, plus some uncertainties and dodgyness of management thrown into the mix...its hard to find reasons to be invested here...!
> 
> Not to mention the general industry conditions!!!!




Most of the corporate governance / management issues can be fixed - in fact,  I would argue that it's far easier to fix governance issues than it is change a broken business model.

With the flagged management changes now filtering through,  it will be interesting to see if there is a noticeable cultural change.   I would expect the first year or so to be a thorough cleaning of the decks.  

Reasons for investment thesis: UGL has the ability to deliver contracts in a wide range of sources,  not just mining.  For instance, the improving macro for infrastructure projects in Australia  (let's face it,  we want to move forward,  we cannot delay these projects forever).   UGL has a proven ability to win and deliver big contracts, and a decent balance sheet (post-DTZ sale) to fund these.

Main reason:  because on relative terms,  considering potential whole-of-cycle returns ex-mining boom,  it's pretty cheap at this price.   No doubt there's execution risk,  and that's exactly why,  I pay attention to position size to limit my risk exposure.

I'm not going to say much more,   this stock has been the main whipping boy in my portfolio.


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## So_Cynical (11 February 2015)

McLovin said:


> (3rd-April-2014) I've been rolling this around in my head for a couple of days. What do you think the engineering business is worth? I'm actually not seeing much upside if a deal is done $1.3b. *If you assign a value to the engineering business of ~$650m* (which is based on a more normal EBIT) then the valuation right now looks pretty full.




10 months on and UGL is an engineering businesses with a market cap of 270M

--------------

Over sold often ends up as over looked and placed in the to hard basket - UGL looking good to me at today's ($1.61) price, cashed up, debt reduced, massive recurring revenues in diversified industry's.


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## notting (11 February 2015)

This was supposed to be one of the quality ones.
It is simply being destroyed by the market.
It seems way over sold but even when the others in the sector get a bit of a reprieve there is no joy for UGL.
Something has gone terribly wrong according to somebody!


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## So_Cynical (11 February 2015)

notting said:


> Something has gone terribly wrong according to somebody!




Ichthys LNG exposure is all i can come up with, that and general recession pessimism, engineering sector etc.

I suppose with a giant project like Ichthys - IF something was up it would be hard to keep a lid on it, maybe its just the fearful getting out of a flat lining stock and into something going up, considering that with the capital return its only the last 3 months that any post CR based reason selling could happen.


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## galumay (11 February 2015)

i reckon the whole sector is massively oversold. Sentiment has turned completely against mining services sector, but like any sector there are good companies in there that will survive, consolidate as the marginal players fail and over time they will again come into favour with Mr Market.

Its a typical contrarian play in a cyclical sector, you just need a long enough view and the psycholgy to continue to own companies in big drawdowns as the sentiment remains negative. 

Not many will agree with me, which is exactly why these companies have bled so much lately.


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## notting (11 February 2015)

I think the only hope for the industry is that if Chinese dictators panic and in order to save their own skin recommence building ghost towers to oblivion. 
UGL has has shown a couple of days of slightly different behavior in the last few days but then given up at the end of the day, which is interesting but still negative.
Unfortunately this commodity route may be for a very very long time unless CCP has one final gasp left in it.
I've heard some of the most corrupt are looking to knock off Xi!!
Alcohol poisoning can be a problem in China.  Would you like potassium cyanide with that sir?
The Chinese people are deeply saddened by the loss of Xi and the CCP will give a public holiday to honor Xi for his services and morn this tragic loss.


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## galumay (11 February 2015)

notting said:


> I think the only hope for the industry is that if Chinese dictators panic and in order to save their own skin recommence building ghost towers to oblivion.




Thats obviously the view of the market too, I see it differently, but then I worked in the industry for 30 years, and the boom may be gone but there is still a huge amount of mining and mineral processing activity in this country and the good companies like Monos and UGL will always have work in this sector, they will survive the cyclical nature of the business and live to fight another day. Some of the marginal operators will be absorbed in the inevitible rationalisation, but the strong will continue on. 

There is so much work that Mining and Processing companies dont even want their tradesmen doing and they will always use contractors for it, thats been true in this business forever and I cant see it changing. Its part of the structure of how the big companies do business, just ask a fitter or sparky that works for Rio or BHP directly and they will tell you their roles are not to do the sort of work the contractor maintenance guys do. 

I concede though that my view is not one widely held outside of the industry and that many see the sector as a basket case, time will tell whether my contrarian view has any merit or not!


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## So_Cynical (19 February 2015)

So_Cynical said:


> 10 months on and UGL is an engineering businesses with a market cap of 270M
> 
> --------------
> 
> Over sold often ends up as over looked and placed in the to hard basket - UGL looking good to me at today's ($1.61) price, cashed up, debt reduced, massive recurring revenues in diversified industry's.




1 week later and UGL is trading at $1.90 - i wasn't the only person who thought it looked cheap.


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## galumay (23 February 2015)

So_Cynical said:


> 1 week later and UGL is trading at $1.90 - i wasn't the only person who thought it looked cheap.




May not look so cheap after they open today. ;(


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## Ves (23 February 2015)

I've been a bad loser with this one.  Enough is enough.


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## notting (26 May 2015)

Press have been talking up a take over and even 2 companies fighting over it!!
Just a contract renewal with BP.
Selling the news.


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## nulla nulla (1 June 2015)

UGL to cut 200 jobs and save $33 million next year. How much are they paying these people?

http://www.thebull.com.au/articles/a/54105-ugl-cuts-200-jobs-to-save-$33m.html

sheez


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## skc (1 June 2015)

nulla nulla said:


> UGL to cut 200 jobs and save $33 million next year. How much are they paying these people?
> 
> http://www.thebull.com.au/articles/a/54105-ugl-cuts-200-jobs-to-save-$33m.html
> 
> sheez




$33m / 200 jobs = $165k per job. But the $33m is all-in savings, not salary. When I was an engineer decades ago, our company's all-cost per head was ~1.5x salary. This cover stuff like insurance, office space, work gear, car, other office expenses etc etc. So without knowing how accurate that factor is in 2015... the salary is probably around $110k per head. Just middle class workers by the looks.


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## notting (17 June 2015)

Good news may have well and truly run its course.
Demand dried up and selling increasing.
Looks like it wants to test 2.40 see if it holds.


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## Gringotts Bank (6 June 2016)

Would anyone like to calculate a valuation for UGL?


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## VSntchr (6 June 2016)

Gringotts Bank said:


> Would anyone like to calculate a valuation for UGL?



Whatever it was on Friday - now take off perhaps a 70% probability of $200m


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## Gringotts Bank (6 June 2016)

VSntchr said:


> Whatever it was on Friday - now take off perhaps a 70% probability of $200m




Thanks.  What would be the time frame for finding out?


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## notting (6 June 2016)

Sometimes ya just don't get a chance.
Been stupid strong for too long.
Who would have been shorting this on Thursday or Friday which would have been an opp to get long.
The greatest fake out of all time?
ABC - Body slam!
But you still could. Let it test 225


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## System (4 January 2017)

On January 3rd, 2017, UGL Limited (UGL) was removed from the ASX's official list in accordance with Listing Rule 17.14, following the despatch of compulsory acquisition notices by CIMIC Group Investments No. 2 Limited.


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