Uni-Asia Finance: Soaring into the Stratosphere!!!

Uni-Asia Finance Corp’s share price has flown into the stratosphere in the last couple of weeks. I previously did some research on the stock in early September. Since then, from trading around $0.60 it has soared to nearly $2 in about two weeks.

What in the world is going on?

The company’s recent HY07 results reveal a 91% jump in net profit. There has been a significant year-on-year jump in both investment income and fee income. However, the Management Discussion & Analysis reveals that a large portion of the increase in income was due to the one-time launch of the Akebono Fund and the one-time disposal of three vessels. In other words, the market seems to be treating the one-time profits as recurring.

The images below, extracted from the latest HY report, illustrate. (Click for full image)

Income Statement

Fee IncomeInvestment Income

Well, well. As for me I'm unable to see the value the market is currently placing on the stock. However, the last couple of weeks certainly look like an exciting ride for the stock price.

For all you know, it might go even higher. To $3, $4, maybe even $10!

Up, up and away......!!!

Uni-Asia Finance Corp

Introduction

Uni-Asia Finance Corp is a recently-listed finance and investment company with operations in China, Hong Kong and Japan. It was founded by three Japanese bankers experienced in the field of structured finance. The main lines of business of the company are thus all related to structured finance and are as follows:

The structured finance income is derived from transactions that the bankers assist in advisory and origination and is akin to investment banking revenue. The ship investment income is income from the company’s investment in ships. This portion of income, which is a significant portion (56.6% in FY 06) of the company’s income, has very similar economic characteristics to shipping trusts. The distressed assets investment income is somewhat in common with the structured finance investments of the Babcock & Brown structured finance fund. All in all, Uni-Asia operates primarily as an alternative assets investment manager with structured finance investment banking income.

Financial & Profitability Analysis

The table below lists the FY results of Uni-Asia from 2004 thru 2006.

The numbers for Uni-Asia are not too far from a comparable, Westcomb financial. The P/E of the company seems reasonable and P/B is conservative.

At the current moment it is difficult to do a comparative analysis between the latest results of Westcomb and Uni-Asia as the latter has not released HY07 results. So I shall keep an eye on this company and do deeper analysis later in the year when results are released and the post-IPO numbers give a better springboard for analysis.