ugl is back in town, page-31

Commentry by my fav analyst yesterday before mkt opened and UGL at $13.10.

Sound Underlying Performance and Well Positioned.
UGL reported a FY09 NPAT of $142.5M, 9% above FY08. Excluding non-recurring items of approximately $20M (pre-tax), adjusted

FY09 NPAT was $156.5M, 8% up on last year and 5% ahead of our forecast. Revenue rose by 37% on pcp to $4.8B. Infrastructure

and Resources recorded strong EBIT growth on pcp. On an adjusted basis, Rail achieved good EBIT growth, though slipped with the

inclusion of the Melbourne rail penalties. Services' EBIT was flat on pcp, though this was supported by the full period contribution of the

Unicco acquisition and favourable FX movements. A final ff dividend of 35.0cps was declared. UGL's order book increased 10% to

$8.2B. UGL provided FY10 NPAT guidance, adjusted for the amortisation of intangibles, of ~$150M. FY10 revenues are expected to

be ~$4.5B. We have increased our medium-term growth and margin forecasts to reflect our expectation of an improvement in Equis,

largely in FY11. We have increased our medium and long-term growth forecasts, particularly in Resources and Rail, to reflect the

broader improvement in market conditions. The net effect is an increase in our FY11 EPS forecasts by 7.1% and an increase in our

longer-term EPS forecasts. Overall, we expect UGL's strong order book will provide important support to FY10 and FY11 earnings.

Whilst the higher contribution from asset services work will keep margins low over the short- to medium-term, longer-term we expect a

recovery in work volumes from higher margin businesses. Our 12-month price target increases to $16.79. We retain our positive view. BUY.