Boustead Singapore

At 9.3 times earnings and about 4% yield, do you guys still consider boustead undervalued?

(22-05-2013, 08:23 AM)felixleong Wrote: At 9.3 times earnings and about 4% yield, do you guys still consider boustead undervalued?

I think its 10 year average PE is ~below 9. Highest is 12+. I dont think its undervalue but fairly or slightly over value.

I only glance through its results last night and i thought not bad but dunno why the price drop.

(22-05-2013, 09:23 AM)Bibi Wrote: I only glance through its results last night and i thought not bad but dunno why the price drop.

Expectations were too high, apparently.

Core earnings were lower than expected, especially for 4Q 2013. Geo-Spatial did badly for 4Q 2013, margins were impacted. Plus no DB&L contracts for some time, O&G division may see slower business and compressed margins from competition. A lot of negatives moving forward. For FY 2014, they will hardly be able to replicate the NPAT for FY 2013, which included a lot of one-offs.

Also, the choice of scrip/cash may give the impression they are cash-strapped, even though they have a healthy net cash balance.

(22-05-2013, 09:23 AM)Bibi Wrote: I only glance through its results last night and i thought not bad but dunno why the price drop.

Boustead price moved up slightly prior to announcement, in anticipation of q-o-q growth in earnings.

However, last quarter earnings actually see a dip, so the trailing PE of the company actually dropped slightly.

The fall in price is probably a reflection of that.

Opportunity to accumulate more

ya lor, i also thought results were good, dropped 5%
so scary
I like boustead but I don't quite understand all 4 of their business, difficult stock to fully comprehend

(22-05-2013, 09:32 AM)felixleong Wrote: ya lor, i also thought results were good, dropped 5%
so scary
I like boustead but I don't quite understand all 4 of their business, difficult stock to fully comprehend

Ya lor i also thought the results were not too bad.

Is it because people see 4Q earning drop?

yeah Q4 results below expectation
for long term investors who understands the company well, a 5% dip is good buying opportunity right? ^^

http://info.sgx.com/webcoranncatth.nsf/V...300378341/$file/FORM1_V4_9_1_TWL-22.05.2013.pdf?openelement

Retiring director withdrawing some pension...

By the way, today's good turnover in Boustead shares should be viewed in positive not withstanding the weakness in share price post results.

Boustead shares are usually thinly traded and hence with on market volume approaching 3.8m appears to be a renewal of shareholder base. On any other day, such volume can easily move the share price down by another 10 to 20 cents.

Vested
GG

Something that we have to understand about Boustead is that we should never view it on a quarterly basis.

Not even ESRI, as at least 40-60% of it is non-recurring. Enterprise License, Consultation Services have different kind of margin. Even Australia, Singapore and Indonesia have different kind of margin.
I don't think ESRI performs very badly this quarter, it is simply because 4Q 2012 has been much better.

4Q 2012 PBT Margin: 26.8% 4Q 2013 PBT Margin: 24.8%
FY 2012 PBT Margin: 24.9% FY 2013 PBT Margin: 26.8%

Comparing the numbers, it really don't look like there's any form of margin compression. In fact, I believe shareholder will have similar problem with 1Q 2014 PBT margin for ESRI when it is announced 3 months later as the margin for 1Q 2013 is 32%, which is an anomaly as I have pointed out back then.

No DBL contract is understandable as Boustead hit a huge road block to reach the critical mass. With the low dividend yield and interest rate that these REITs are trading at, it is so much easier for REIT to bid for yield accretive DBL project while undercutting Boustead's margin. While some CEOs might resort to price cutting to reach that critical mass, I think we should be glad that Mr Wong is not one that will take on projects with low ROI that essentially destroys shareholder value for short term benefit. In addition, it can be seen that Mr Wong and Boustead have put in lots of efforts to come up with the best method to realise the value of this 100,000 sqm DBL portfolio for shareholder, apart from the traditional method of REITing it. That say, it certainly seemed like there's lot of unused capital sitting on the balance sheet.

Can't comment on other divisions without the AR and stripping off all the one-off income.

With regards to the scrip dividend, I am not too worried about it as the problem of Boustead is not being able to deploy the capital and not insufficient capital. I believe it is rare that company in Singapore will allow shareholder to choose a combination of scrip and cash. Most will simply allow pure cash or pure scrip. (Correct me if I am wrong as this is my first time receiving scrip) This simple but rare act does show something about the management though maybe he has a perfect combination of scrip and cash that he prefers. Just wondering what his option will be?

Lastly, I don't think we should pay much attention to the share price for the past 2 days. Yesterday, it reached a new high. Today it falls by 5%. If last Friday I did not purchase the share at $1.45, has the business changed so much in a few days that it is now a bargain after it has fallen 5% from a new high back to $1.45? Personally, I think it is just business as usual for Boustead without any special development.

(vested)

Hi Shanrui,

Thanks for your detail analysis. As a wrong term shareholder, I am finally seeing the true potential of Boustead.

According to the webcast, if I am not wrong, I heard the following:

i) ESRI - 11 years of growth. 70% from Australia, supposed a well regulated market which they have 85% market share and 90% of their clients from Federal and State governments (whatever that means) - MONOPOLY.

I can only dream of owning a piece of MONOPOLY and it is staring in my face. Boustead has a MONOPOLY business in ESRI - no wonder it is a recurrent cash generator.

ii) Oil & Gas - oil prices not concern and benefiting from shale gas revolution in North America. Mr Wong mentioned that Dow Chemical is the end client that handed down the $39m contract and BIH appears to be in the running for more. Net margins after tax is 10%.

iii) Unlocking values from 9 ind property portfolio - I am also excited especially with the stapled concept on a ordinary share - killing 2 birds with one stone - immediately saved on 18% corporate taxes and shareholders get transparency in terms of dividend guidance from the rentals. In addition, the vehicle will be a pipeline for any future DBL contracts.

Shall wait for analysts updates and see how it goes but definitely transparency at Boustead has improved substantially.

Vested & HU8TPPY
GG