Boustead Singapore

(21-07-2013, 10:13 AM)brattzz Wrote: 2nd oldest company in malaysia/singapore history.. waos... :O

Shd be oldest soon...when guthrie gts gets taken over successfully..

Boustead is probably the best performing projects-oriented company I can think of.

And now FF Wong steers it to building recurring income.

He missed the early bet on the REITs though. Hopefully not too late... haha

UK is the home base of Boustead Int'l Heaters. The impact may be still far but definitely worth monitoring...

http://money.cnn.com/2013/07/19/news/eco...index.html

U.K. plans big tax breaks for shale gas
By Alanna Petroff @AlannaPetroff July 19, 2013: 7:47 AM ET

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fracking shale gas
The U.K. government predicts that proposed tax breaks for fracking companies will stimulate £14 billion ($21 billion) in shale gas investment in 2013.
LONDON (CNNMoney)
The U.K. government is planning to slash taxes for energy companies in a bid to stimulate a U.S.-style shale gas boom.
The Treasury has proposed cutting the tax rate on production income to 30% for the fledgling shale gas sector, compared to the typical 62% rate that most oil and gas companies pay.

"Shale gas is a resource with huge potential to broaden the U.K.'s energy mix," said Chancellor George Osborne. "We want to create the right conditions for industry to explore and unlock that potential."
The proposal also outlines other financial incentives for the sector. The government hopes the measures will stimulate £14 billion ($21 billion) in shale gas investment this year and create thousands of jobs.
Related: U.K. prepares for U.S.-style shale gas boom
A handful of energy companies have been granted licenses to look for shale gas opportunities in regions across the U.K. According to a recent report, it shouldn't be too difficult to find those deposits.
The British Geological Survey estimates that northern England has as much as 2,281 trillion cubic feet of gas - a monumental amount given that the U.K. uses only 3 trillion cubic feet each year.
However, experts say only a fraction of the available shale gas -- between 10% to 30% -- can actually be extracted from the ground, while the remainder is unreachable and uneconomical to pursue.
Israel's play for energy independence
Israel's play for energy independence
Techniques such as hydraulic fracking -- which involves injecting water, sand and chemicals deep into the ground at high pressure to crack the shale and allow the oil or gas to flow -- have made the extraction of oil and gas from shale rock commercially viable.
The process is controversial, however, with environmental campaigners arguing that fracking could pollute water supplies and possibly trigger earthquakes.
The U.S. has been a pioneer in the fracking field, and the International Energy Agency issued a report saying this will help the country become energy independent by 2030.
The American shale gas industry accounted for over 600,000 jobs and paid almost $20 billion in taxes in 2012, according to the U.K. government.
The new tax proposal will go through a consultation period before being presented to parliament. To top of page

Boustead Singapore plans industrial REIT

By Leu Siew Ying
2138 words
22 Jul 2013
The Edge Singapore
EDGESI
English
© 2013 The Edge Publishing Pte Ltd. All Rights Reserved.
The venerable engineering company is creating a property securitisation platform to fortify its recurring income base and boost its growth. Will it succeed? What does it mean for investors?
Wong Fong Fui, chairman and CEO of Boustead Singapore, remembers being pleased with himself when he sold four industrial properties back in 2005 at what he thought was an irresistible price. Those properties formed part of the property portfolio of MapletreeLogistics Trust, which was listed that same year. Boustead Singapore also divested other income-yield buildings to real estate investment trusts (REITs) over the years, such as StarHub Green.
Looking back, Wong realises that Boustead Singapore might have been better off holding on to its industrial property assets and launching its own industrial REIT. “Earlier on, we didn’t see the potential of doing our own REIT becausewe thought we could always sell to REITsand recycle our capital. But when we sell, we lose on recurring income. That’s why we kept some of our projects,” Wong tells The Edge Singapore in an interview.
Now, Wong is preparing to jump on the REIT bandwagon. By offloading industrial properties it has held on to for recurring income into its own REIT, the company would not only be able to maintain its liquid balance sheet, but also benefit from a steady stream of management fees. Moreover, the REITs benefit from tax incentives if they pay out more than 90% of their distributable income to investors.
Having a platform to securitise its industrial property assets would also enable Boustead Singapore to free up capital for businesses and projects with higher returns, perhaps enabling it to accelerate its growth. In the last few months, companies such as Singapore Press Holdings and Overseas Union Enterprisehave seen sharp rallies in their share prices afterannouncing plans to launch their own REITs for exactly that reason.
On June 28, Boustead Singapore announced the setting-up of Boustead Trustee for real estate trusts, Boustead Trustee-Manager to act as a trustee manager and to hold real estate investments, and Boustead Funds Management to manage real estate trusts. Then, on July 11, Boustead Singapore signed an option with -AusGroup to buy and lease back its workshop in Tuas for $39.3 million. The property, which is being held under Boustead Trustee, is slated to form part of the initial portfolio of assets for the REIT that the group plans to create, according to officials at the company.
Boustead Singapore has a long way to go before it has a sufficiently large pool of assets to launch an industrial property REIT, though. The engineering group has four key divisions: oil and gas, water and wastewater treatment, geo-spatial technology and industrial real estate. Called Boustead Projects, the real estate division owns a portfolio of nine industrial properties with a combined gross floor area (GFA) of 102,663 sq m. These properties are worth about $300 million, according to company officials.
In comparison, when Mapletree Logistics Trust listed in 2005, it had a portfolio valued at $422 million comprising 15 properties with a total lettable area of about 292,000 sq m, excluding Pulau Sebarok, which was effectively a piece of raw land. When Mapletree IndustrialTrust came to market five years later, its portfolio of 70 properties with a GFA of 1.5 million sq m was valued at $2.1 billion. In 2010, Cache Logistics Trust (CLT), which is linked to logistics group CWT, came to market with a portfolio of six properties valued at $730 million.
Wong concedes that Boustead Singapore faces an uphill battle in building up its industrial property portfolio. “The selling in the early days makes it difficult for us to get critical mass. We are struggling,” he says candidly. “JTC is now preventing people from speculating. It is introducing measures to tighten control, which makes it more difficult for us to acquire good properties.”
Following the steep run-up in industrial property prices over the past couple of years, the government has halved the leasehold tenure of industrial sites being sold from 60 years to 30, to maintain its affordability. However, the shorter leasehold tenure has made these properties less suitable for REITs, which are focused on generating stable, long-term income.
Meanwhile, lower absolute prices for industrial properties with shorter leasehold tenures have actually encouraged even more speculation, according to some property market watchers, with SMEs rushing to buy units at new industrial developments. The result has been higher psf prices for industrial land.
Despite these challenges, Wong is determined to press on with the idea of creating a REIT, believing that its tax-efficient structure will benefit shareholders of Boustead Singapore. “We have to do it,” he says. “Doing this helps shareholders to save corporate tax on dividends.”
Hunting for acquisitions
Boustead Singapore does have a number of things going for it. Notably, the company had a cash hoard of $189.1 million as at March 31, which is still growing. And, it has no debt to speak of. Its officials say it could comfortably borrow $400 million to $500 million to acquire properties that would eventually be placed in a REIT. And, with the help of external investors willing to participate in the REIT, the group could probably amass a sizeable portfolio, according to its officials.
“We don’t need an external partner to do it, but we are looking for a partner to share risk and help us build our portfolio,” says Wong. Indeed, this might be an opportune moment for Boustead Singapore to begin hunting for suitable industrial properties. With concerns about the US Federal Reserve’s eventually tapering its massive bond-buying programme, global interest rates have edged up and share prices of REITs have taken a beating. That puts REITs in a relatively weaker position to raise debt and equity to acquire income-generating properties that would be immediately yield-accretive to them.
“Finding yield-accretive acquisitions is more difficult, with yields going up. So, this will play to our advantage,” says Keith Chu, vice-president for corporate marketing and investor relations at Boustead Singapore. According to him, the company set up a team last year to hunt for suitable properties, and he expects the pace of acquisitions to accelerate in the months ahead. Besides looking for properties with a good return profile, the team is also looking for assets that have good long-term redevelopment potential.
Indeed, the acquisition of the Tuas propertyfrom AusGroup — a result of the team’s efforts — was made partly because of its long-term redevelopment potential. The workshop is sitting on a 29,893 sq m piece of waterfront land with a current plot utilisation ratio of 0.38, whereas the approved maximum ratio is 1. The land tenure is 30 years plus 30 years beginning in 1995. Boustead Singapore has an agreement with AusGroup to lease the property until May 2025, following which AusGroup has an option to extend the lease by five years.
Chu says Boustead Singapore could redevelopthe property after the lease expires. However, it is likely to first hunt for a suitable tenant,because such projects are built to clients’ specifications and rented to them on a long-term basis.
In the meantime, for the next 12 years, Boustead Singapore will be collecting a rental income of $3 million a year, plus 6% of the land premium, from AusGroup. This works out to $3.3 million, giving Boustead an unleve¬raged rental yield of 8.4%, according to Lee Yue Jer, an analyst at DMG. Boustead Singapore has to pay an estimated land premium of $4.6 million, but it has deftly passed some of this cost to AusGroup.
Industrial property expertise
Besides making acquisitions, Boustead Singapore will naturally create assets for its REIT through the design, construction and leaseback of industrial properties for its clients. “We are the pioneers in Singapore [for] industrial properties leaseback. With our design capability and leaseback model, we will be able to continue to create a pipeline,” Wong says.
The group’s Boustead Projects division has accumulated significant expertise over the years in designing and building facilities for the logistics, aerospace and MRO (maintenance, repair and overhaul) sectors. The unit is also breaking into new areas such as building facilities for the biomedical and healthcare sectors, in consultation with experts to help it understand its clients’ needs. The properties currently in Boustead Projects’ portfolio are occupied by clients involved in the automotive, aviation, logistics, marine, oil and gas, and technology industries.
Boustead Projects has not announced any “design, build and leaseback” contract since May last year. However, it recently won a contract in excess of $100 million to “design and build” a design centre for disk drive giant Seagate Technology,the largest such deal it has ever secured. The unit also has a healthy pipeline of enquiries, including a large number of small projects of up to $20 million and a handful of large projectsworth more than $100 million each, according to officials.
Wong is betting that the expertise of Boustead Projects is what will distinguish the group’s industrial REIT. “Our competitors don’t have the expertise,” he says. “They just make acquisitions and float them. They make money because they are good managers, [but] they have no pipeline.”
Boost from energy, property
Wong, 69, grew up in rural Malaysia, tapping rubber early in the morning before heading to school. He claims to have taught himself English largely through listening to the BBC on the radio. Through dint of hard work and some luck, he managed to enrol in Australia’sUniversity of New South Wales, where he earned a degree in chemical engineering. He went to work for Esso and Ralph M Parsons before setting up his own engineering services business in Indonesia. By the time he was 40, he had made enough money to retire, but he returned to work a few years later as managing director of QAF, an ailing food manufacturer controlled by the Brunei royal family. Wong turned the company around. In 1996, its shareholders — including Wong, who had an 8% stake — sold it to Indonesia’s Salim group.
That same year, Wong acquired control of Boustead Singapore, a company with a history that dates back almost two centuries. Its businesses today essentially revolve around engineering, but lumpy earnings from projectsscattered around the world have made it difficult for the group to garner a broad investor following. For FY2013, Boustead Singa¬pore reported a 46% jump in earnings to $81.4 million. The bottom line was boosted by a number of non-recurring items, including tax writebacks and the disposal of some assets.
One thing about Boustead Singapore that has attracted investors is its record of generous dividend payouts. The company, which is 33.25%-owned by Wong, declared a total dividend of seven cents per share for FY2013, which included a special dividend of two cents per share. That represents a yield of 5% at its current share price. Shares in Boustead Singapore are up 36% this year. They are currently trading at 11 times forward earnings and at 2.3 times its net asset value of 60 cents per share as at March 31.
Looking ahead, officials at Boustead Singapore see a couple of interesting developments unfolding at the group. Notably, its energy division won $90 million worth of energy contracts in 1QFY2014. Among them was a contract from Brunei’s Berakas Power, which it won as part of a consortium with General Electric. Its energy division supplies process heaters and waste heat recovery units to the oil and gas industry. The Brunei contract is its third in the power sector.
Interestingly, Boustead Singapore might emerge as a beneficiary of the shale energy boom in the US. Major petrochemical companies such as Shell Chemicals, Dow Chemicaland Chevron Phillips Chemical are building their first cracking plants in the US in decades to take advantage of its vast shale reserves. Boustead’s energy arm won its first contract to supply process heaters to a petrochemical plant that uses shale gas as feedstock last year. “We see energy as quite a bright spot,” says Chu. “North America is looking pretty exciting. North America as an energy hub is getting vibrant. We have quite a number of enquiries coming from North America.”
Then, there is Boustead Singapore’s plan to create a REIT platform to securitise its industrial property division’s portfolio and accelerate its growth, which could give its stock a boost. The way Wong sees it, there is no downside to this move. “If we don’t get it, we will still give recurring income to shareholders. No harm done to get ready for a REIT. It doesn’t cost much time and effort,” he says.

The Edge Publishing Pte Ltd

Document EDGESI0020130724e97m00033

Aussie public healthcare is stretched by debt laden State and Federal coffers. Funding crisis can only worsen due to both State and Federal budgets and if technology can help, it will open up a new avenue growth for ESRI Australia

http://esriaustralia.com.au/news-local/g...is-nar-168

GIS technology can put hospital crisis to bed, says expert GIS
By Olivia Blake 24 Jul 2013
Cutting-edge mapping technology being trialled by health providers in the US could help Australia tackle its hospital bed crisis, according to a visiting international geo-health expert.
Angelica Baltazar, a Geographic Information System (GIS) health and human services specialist at technology giant Esri, has been invited to Australia this week to advise the state’s health organisations and providers.
Her visit comes following reports the Australian health system is at ‘breaking point’, with hospital patients forced to spend hours on stretchers waiting for beds.
Ms Baltazar said, like their US counterparts, Australia’s health decision-makers could use a ‘new generation’ of intelligent mapping technology to reform their ailing systems.
“Hospital bed shortages are common around the world as countries’ health systems face the dual challenges of increasing populations and the fact people are living longer,” Ms Baltazar said.
“Health-care providers in the US are currently trialling GIS technology-enabled patient care and room management systems to make better decisions about how to assign patients to beds and rooms, and monitor the discharge process.
“The technology captures maps and analyses a vast array of information about patients checking in, switching rooms, checking out, and moving from hospital to outpatient care.
“A hospital’s layout can be mapped against variables such as bed demand, staff numbers and nurse availability, to provide information about beds on an hour-by-hour basis.
“Downey Regional Medical Centre in California is currently trialling this approach to help manage their existing infrastructure more efficiently.
“There is no reason why the same approach would not work to address issues here in Australia.”
Ms Baltazar said GIS technology could assist throughout a patient’s whole hospital experience.
“The routing of ambulances is incredibly important – and GIS technology can provide optimal directions to not only the closest hospital, but also to the hospital most applicable to a patient’s needs,” Ms Baltazar said.
“It does this by taking into account staff availability and expertise, traffic situations, hospital capacity and other factors before producing the best routes.”
Ms Baltazar will be touring Australia over the next week to discuss the technology in partnership with Damien Cassin, a health and GIS specialist at Esri Australia – the GIS market-leader in Australia’s $2.1 billion spatial industry.
Mr Cassin said tackling the heart of the bed crisis required GIS technology to analyse where demand for hospitals was coming from – and to determine how it can be alleviated.
“To do this – many important questions need to be answered: Why are patients choosing to go to certain hospitals? What level of care are they seeking?,” Mr Cassin said.
“It may be that many patients go to hospital when they could be treated at home, or that certain GPs are encouraging patients to go to one particular hospital.”
“These questions can be answered by mapping out data pertaining to a health ‘region’ – such as patient medical and survey data, community demographics and hospital locations, and services provided.
“In this way, GIS technology becomes an efficient and effective decision-making tool for health systems struggling to meet the community’s demands.”

http://foreverfinancialfreedom.blogspot....dom+(3Fs))

Friday, July 26, 2013

Boustead AGM - 26.07.13
This evening's Boustead Annual General Meeting (AGM) was held at the Roxy Square and as I happened to attend this event, I would like to summarize and recap what has been discussed to fellow and potential investors who might be interested in the company.

This is also my first time seeing the Chairman of Boustead, Mr. Wong live in person. He seems to be very humorous, joyful, fun and light hearted towards the shareholders. Definitely one of the more fun-going Chairman I have witnessed in the AGM.

Without further a due, we'll begin with the Q&A sections of the EGM and AGM.




As the EGM was scheduled ahead of the AGM, the one and only resolution was to pay in scrip-dividend method. One of the queries asked was why Boustead continued to elect for a scrip-dividend when its take-up rate is low and which may take up unnecessary admin costs. The reply given to this from the Board was that the admin fee costs are very minimal (<S$10K), but they would consider to cancel off the scrip-dividend method in the future if response are unfavorable.

The next question relates to the Real Estate division and as expected the query for REITS came out. One of the shareholder asked about the direction Boustead is going to take the Real Estate division moving forward - whether the company is moving into the direction of building a non-industrial design facility to sectors like Rolls Royce or building industrial properties to have it eventually inject into a REIT. Mr. Wong responded by saying that the company would still take up contracts unrelated to industrial design because of its attractive returns. As for the REIT, the one thing Mr. Wong had regretted about it was that Boustead had sold industrial properties to Mapletree group in the past, only to have them listed as what investors now known as the "Mapletree Industrial Trust (MIT)" with former Boustead industrial properties. If they had set up a REIT back then, he would have not sold off its properties to competitors in order to raise cash.

The next question to the Board was at which direction and profit margin is Boustead going to focus on its 4 core businesses in the next couple of years. Mr. Wong responded by saying that the Energy Related division is always going to be the drive for Boustead and foresees a growth of 10% year on year on the Energy related division. As for the Water & Wastewater Engineering division, order book has been piling up but margins are low and competition is higher, thus resulting in a low growth division compared to the other 3. The Real Estate division is tricky because it depends on the lumpy orderbook but just having said this, Boustead has managed to secure a mega $100m contract for Seagate which is something the company can look out favorably for. The company is also in the midst of negotiating a couple of other mega contracts in the process.

There was also one shareholder who raised the question on gain/loss on available-for-sale investments on Notes 31 of the Annual Report. The Board responded by saying that the company has invested in an Australian-listed stock and made a minor gain realized on its books. IMO, I'm quite unsure why Boustead is moving into all these share investment. Is that even necessary at all?

The next question was raised on the Libya project. Whilst the total project and losses are already written off in the book, the company is still in the midst of legal claims sued by banks on non-performing loans. If find liable, the company will have to pay off $28m for the claims. The Board however, assured investors that the company is most likely to win the battle and with that they did not make any provisions to their books.

Last but not least, Mr. Wong has assured shareholders that Boustead is moving into the right direction with all the growth related divisions making good progress over the last couple of years. The huge pile of cash Boustead is holding right now will be invested in a low risk blue chip bonds such as CapitaLand and Biosensor. When opportunity arises, Boustead is going to reap its rewards from it.

I haven't been able to summarize all the discussions over the AGM but hope I have put out the overall picture there. Boustead isn't the easiest business to understand (you might disagree with me) and with lumpy contracts, earnings are not going to be easy to project and recurring. For fellow shareholders who went to the AGM this evening, appreciate if you could share more on the discussion on Boustead.

*I apologize if any of the above stated is incorrect.
Posted by B at 7:39 AM

(27-07-2013, 03:56 PM) Wrote: The huge pile of cash Boustead is holding right now will be invested in a low risk blue chip bonds such as ... Biosensor.

I wonder why Boustead consider Biosensor as low risk blue chip.

On the same day of AGM (unclear if is after or before), Mr Wong appeared in Continental Automotive building expansion kickoff ceremony.

Please refer to Business Times, it is said that the expansion will add 5000sqm, which is > 45% add-on to existing db&l building.

PUBLISHED JULY 27, 2013

BT: Automotive supplier expands R&D centre


Continental's building extension in line with plans to double workforce to more than 1,300 over next 4-5 years
BYANNABETH LEOW LEOWHMA@SPH.COM.SGPRINT |EMAIL THIS ARTICLE
BT 20130727 HMCONTINENTAL27 686425
SOLID BACKING
(From left) Angelika Viets, German Ambassador to Singapore; EDB's Mr Lim; Continental's Mr Lo; and Wong Fong Fui, executive chairman and group CEO, Boustead Singapore Limited. A research priority for the Singapore centre is the development of in-car information management systems. - PHOTO: CONTINENTAL AUTOMOTIVE SINGAPORE

GERMANY-BASED automotive supplier Continental yesterday broke ground for a seven-storey wing at its research and development centre, which was itself completed just a year ago.
The extension, which Continental Automotive Singapore managing director Lo Kien Foh expects to be ready next year, is slated to accommodate around 450 employees, and will add 5,000 square metres of floor space to the 10,170 sq m R&D facility.
Total capital investment comes to 17.5 million euros (S$29.7 million).
This, said Mr Lo, is in line with the company's plans to double its workforce in Singapore from some 650 last July to more than 1,300 within the next four to five years. He said that the company also plans to raise Asia's share of corporate sales to more than 30 per cent over the next few years.
Continental reported 32.7 billion euros in global sales for 2012, out of which sales in Asia accounted for some six billion euros, or 18 per cent.
The R&D complex in Singapore, on Boon Keng Road, is one of Continental's three global R&D centres for its interior division, which focuses on the design of interior automobile features.
According to Mr Lo, a research priority for the Singapore centre is the development of in-car information management systems.
He said that more than 70 per cent of Continental's Singapore-based employees work in engineering and design.
"Our commitment is to recruit more local talent, and develop local expertise in collaboration with our international teams, and our partners in Singapore."
Singapore is an attractive site for an R&D centre, he said, because "it has got the expertise, has got the talent".
"Singapore will be a location that we can grow with the number of resources, the amount of competence, that we have."
Echoing this point on the training and retention of talent, Lim Kok Kiang, executive director of transport engineering at the Economic Development Board, mentioned relevant specialised engineering programmes at the National University of Singapore and Nanyang Technological University, as well as related courses at local polytechnics.
"I trust that as Continental continues to grow in scale and scope, it will create even more exciting career opportunities for the people of Singapore."

(27-07-2013, 08:30 PM)ksir Wrote: On the same day of AGM (unclear if is after or before), Mr Wong appeared in Continental Automotive building expansion kickoff ceremony.

Please refer to Business Times, it is said that the expansion will add 5000sqm, which is > 45% add-on to existing db&l building.

(18-07-2013, 09:03 AM)greengiraffe Wrote: Hi,

I definitely agree with your comments - hit and miss is part and parcel of business.

Actually, I meant I don't know what these land tenders are meant for since Boustead Projects is not known to be actively participating in land tenders.

GG

That's what it has been as I have thought that any MNCs can be exempted from the Government Land Sale by going through the edb, jtc route to get a land.

yesterday, I was talking to the VP IR, Mr Keith Chu, about it. He said that there are many cases where the MNCs' application has been rejected and they have to go through gls. And when i ask him about the BP-mandai, he said that this particular client has to go through the gls. (not sure if it is because it is local SME or a MNCs that got rejected)

In any case, he did hint that someone that has been following Boustead should know that the announcement on incorporation of subsidiaries like BP-Mandai is likely to lead to something. I believe this has been mentioned somewhere in the thread before.

Due to the numerous announcements of setting up of new subsidiary in the recent months, I asked if Boustead has been bidding for new DBL projects with a tax-exempted IRR and the reply is that it did in some cases. While the tide has turned (with increasing yield for industrial reit and potentially higher interest expense), I am not sure if this is a good sign. Guess it will be a balance of speed of reaching the critical mass and getting a reasonable IRR. my gut feel is that they are still more interested in reaching the critical mass and not taking the immediate option of a stapled reit.

Taking into account the expansion of continental, the ausgroup sale and leaseback, BP-SCC, BP-EA and BP-Mandai which needs to get a land, guess they are one step closer. Although it may need another 50-60 k sqm to reach the magic number of 200,000, it has been quite a development for the DBL portfolio ever since a fruitless 1 year.

(vested)