Uni-Asia Group (UAG SP): Sailing to the moon

  • BUY Entry – 0.85 Target –0.91 Stop Loss – 0.82
  • UAG is an alternative investment company which owns and manages bulk carriers, invests in Hong Kong commercial offices and develops residential properties in Japan. The group derives around 65% of its revenues from charter income generated by its fleet of bulk carriers, and the remainder of revenue is from its property projects in HK and Japan. While its shipping business performed poorly in 2020 due to weak charter rates and impairments, it has shown a strong V-shaped recovery in 2021. 
  • Baltic Dry Index (BDI) highest in 10 years. The BDI crossed the 3,000 point mark for the second time this year, the highest in more than 10 years. 
  • More than a V-shaped recovery in charter rates. More specific to Uni-Asia’s fleet of 18 handysize carriers, the Baltic Handysize Index recently staged a strong comeback after a short-lived correction (shown in the chart below), and now trades above 1,400 points, driven by very favourable supply-demand dynamics for smaller bulk carriers. 
  • Outperform. We currently have an OUTPERFORM recommendation and TP to S$0.91, based on SOTP valuations. 
  • Read our full report here.

Baltic Dry Index Handysize Index (2016-2021 YTD)

Baltic Dry Index Handysize Index (2016-2021 YTD)
KGI SECURITIES SINGAPORE - UAG SP 23 JUNE 2021
UAG SP (Source: Bloomberg)