UGL - UGL Limited

[VSntchr]

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!!!!

 

[Ves]

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.

 

[So_Cynical]

(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

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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.

 

[notting]

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!

 

[So_Cynical]

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.

 

[galumay]

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.

 

[notting]

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.

 

[galumay]

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!

 

[So_Cynical]

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.

 

[galumay]

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. ;(

 

[Ves]

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

 

[notting]

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

 

[nulla nulla]

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

 

[skc]

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.

 

[notting]

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.

 

[Gringotts Bank]

Would anyone like to calculate a valuation for UGL?

 

[VSntchr]

Would anyone like to calculate a valuation for UGL?

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

 

[Gringotts Bank]

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

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

 

[notting]

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

 

[System]

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.