Boustead Singapore

http://infopub.sgx.com/Apps?A=COW_CorpAn...H2KJ5mwrqA

Boustead reit in the works?

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(02-12-2014, 05:46 PM)thor666 Wrote: http://infopub.sgx.com/Apps?A=COW_CorpAn...H2KJ5mwrqA

Boustead reit in the works?

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Looks more like they are spinning off the entire industrial property business as a separate entity and distributing the shares as a form of dividends to existing share holders.

Why bother with a REIT when they can continue to build a portfolio with the backing of SWF?

Keep building and hopefully when time is ripe, the spinoff can become a sponsor on its own and established a REIT on its own.

In addition to this, the Engineering division alongside with steadily growing cash cow can stand on its own and fetch a premium valuation given that the cash generating capabilities of ESRI has always been overlooked.

If materialise down the road, Boustead OldCo and NewCo are likely to continue to be decent dividends yielders.

Sum of Parts are more than 1 since there is still hope for another REIT listing.

Looking forward to one more share certificate to add to my collection and also 1 more autograph from the Godfather Wong.

Vested
Reduced Core
GG

(02-12-2014, 05:51 PM)Tiggerbee Wrote:

(02-12-2014, 05:46 PM)thor666 Wrote: http://infopub.sgx.com/Apps?A=COW_CorpAn...H2KJ5mwrqA

Boustead reit in the works?

Sent from my D5503 using Tapatalk

Looks more like they are spinning off the entire industrial property business as a separate entity and distributing the shares as a form of dividends to existing share holders.

If I may add, Boustead seldom announced plans that lead to nought... less concern on hyping share prices via pre-mature announcements - I think CIMB analysts are too green on Boustead and not familiar with its track record...[/font]

Boustead,CIMB downgraded to HOLD:

Key takeaways from NDR
During the NDR that we hosted for Boustead, Chairman and CEO Mr Wong
Fong Fui shared the group’s strategy and outlook with investors. We still like
Boustead’s high-quality management and multi-pronged growth strategy.
However, the recent drastic plunge in oil price and the possibility of a
prolonged period of low oil prices would cause overhang on Boustead’s energy
infrastructure division. We keep our FY3/15 core EPS but cut our FY16-17 EPS
by 11.8-13.3% to reflect the lower project activity in Boustead’s energy
infrastructure division. We downgrade Boustead from Add to Hold, with a
lower target price of S$1.88 based on 10% discount to FY3/15 SOP valuation.
Sustained energy contract wins are potential re-rating catalysts.
What Happened
We hosted a NDR for Boustead in Singapore on 2nd Dec. The three key
takeaways from the NDR were: 1) management stays interested in channelling
excess cash into acquisitions. The depressed oil & gas sector could present
M&A opportunities for Boustead, 2) management foresees near-term margin
pressure and a decline in enquiries for the energy segment. However, it
remains confident that long-term demand for liquid fuel will rise, especially
from emerging markets like China (which is to gradually replace coal with
cleaner liquid fuel) and India, 3) the group is exploring opportunities to expand
its industrial real estate business beyond Singapore. Management views
Indonesia and Malaysia as accommodative markets.
What We Think
We continue to like Boustead for its strong management track record and
multi-pronged growth strategy. Given its strong net cash position and flexibility
of using debt financing, Boustead has a strong foundation to pursue expansion
via potential M&A. Its industrial property development partnership with Abu
Dhabi Investment Council gives Boustead another pillar of growth.
What You Should Do
Downgrade Boustead from Add to Hold. Valued at 12x FY16 P/E, the energy
segment formed 24% of our previous SOP valuation. We cut our FY16 net profit
estimate for Boustead’s energy segment by 36% from S$23.7m to S$15.2m to
reflect the lower level of project activity. After the market closed today,
Boustead announced the potential demerger of its real estate business, which
would unlock shareholder value. However, the company stated that the
demerger plan is still in the preliminary stages and may not materialise.

I am going to hazard a guess.. Boustead probably has 80% done up their background work to demerge the real estate solutions, rather than it being a preliminary idea.

Also, based on the recent wins, boustead seems to be aiming for higher value business beyond oil and gas. Seems they are able to sell to customers their expertise in complex turnkey projects.

(Vested)

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My key takeaways from today's Investor Day. Note all this is based on my personal interpretation of what I heard:

- 170000 sq m industrial leasehold portfolio, of which 35000sq m still under construction. $380-500mn estimated market value (but to on the books they are carried at cost). Estimated $700-800mn asset value required to list REIT.

- Letters of offer received for all 50+ units offered in phase 1 launch of iskandar project. Not signed yet.

- Cannot see significant effects of low crude oil price on enquiry pipeline of energy related engrg div yet. Probably clearer 3-6 mths down the rd. Likely impact if prolonged price below 80usd.

- Boustead Proj has been surviving well on its own without need for intervention by FF Wong except where significant risk needs to be assessed. Demerger will reward BP mgt and also unlock shareholder value. According to FF Wong, also part of succession planning, as board had assessed that it was easier to find professionals to run the individual businesses than to replace him.

(10-12-2014, 02:22 PM)Muck Wrote: My key takeaways from today's Investor Day. Note all this is based on my personal interpretation of what I heard:

- 170000 sq m industrial leasehold portfolio, of which 35000sq m still under construction. $380-500mn estimated market value (but to on the books they are carried at cost). Estimated $700-800mn asset value required to list REIT.

- Letters of offer received for all 50+ units offered in phase 1 launch of iskandar project. Not signed yet.

- Cannot see significant effects of low crude oil price on enquiry pipeline of energy related engrg div yet. Probably clearer 3-6 mths down the rd. Likely impact if prolonged price below 80usd.

- Boustead Proj has been surviving well on its own without need for intervention by FF Wong except where significant risk needs to be assessed. Demerger will reward BP mgt and also unlock shareholder value. According to FF Wong, also part of succession planning, as board had assessed that it was easier to find professionals to run the individual businesses than to replace him.

http://boustead.listedcompany.com/newsro...RU6C.1.pdf

He has done it with QAF (not vested during the 90s) and Easycall (vested and benefited from Boustead's distributions) and only time can testify the milestones he has laid and will be laying...

Vested
GG

It's a rather elegant way to resolve the succession plan. BP is always managed in a rather standalone way. Remember how they must find their own funding (Bank borrowing) to build up DB&L portfolio.
There was a question posted in one AGM on why Boustead must borrow from Banks while they are swimming in cash?
And the answer was, to build the discipline of considering the cost of capital before BP commits to build DB&L.

(Vested)

(10-12-2014, 02:22 PM)Muck Wrote: My key takeaways from today's Investor Day. Note all this is based on my personal interpretation of what I heard:

- 170000 sq m industrial leasehold portfolio, of which 35000sq m still under construction. $380-500mn estimated market value (but to on the books they are carried at cost). Estimated $700-800mn asset value required to list REIT.

- Letters of offer received for all 50+ units offered in phase 1 launch of iskandar project. Not signed yet.

- Cannot see significant effects of low crude oil price on enquiry pipeline of energy related engrg div yet. Probably clearer 3-6 mths down the rd. Likely impact if prolonged price below 80usd.

- Boustead Proj has been surviving well on its own without need for intervention by FF Wong except where significant risk needs to be assessed. Demerger will reward BP mgt and also unlock shareholder value. According to FF Wong, also part of succession planning, as board had assessed that it was easier to find professionals to run the individual businesses than to replace him.

On the first point. A few months back, Boustead started a JV with Crsecendas (a company which owns real estate properties). Boustead has a 55% stake in the JV. This may be an indication of an impending Industrial REITS IPO. 380M out of 700M is about 55%.

Another thing I like about Boustead is its geo spatial segment, which is a big thing especially among the govt sectors. This is something Boustead can leverage on. However, given its high share price now. I suspect the above 2 events may have been priced in to an extent

(10-12-2014, 07:54 PM)ksir Wrote: It's a rather elegant way to resolve the succession plan. BP is always managed in a rather standalone way. Remember how they must find their own funding (Bank borrowing) to build up DB&L portfolio.
There was a question posted in one AGM on why Boustead must borrow from Banks while they are swimming in cash?
And the answer was, to build the discipline of considering the cost of capital before BP commits to build DB&L.

(Vested)

I feel that the solution is "half a solution". According to FF Wong, the Board thinks it is easier to hire professional managers for the business units but it is difficult to replace him.

As GreenGiraffe mentioned, he has had a string of successes before Boustead. IIRC, he made his fortune before 40 and for a time, he was running Myanmar's airline at one point. He is an exceptional entrepreneur.

How would Boustead fare without a deal-maker/capital allocator like him at the helm?

(Vested)