Boustead Singapore

[Nick]

Thanks for the update MW. Their real estate development division will be busy for the next 1 year ! Any idea how much of their revenue comes from recurring rental ? The margins will definitely be high but is the returns good ? Overall, a mixture of EPC works backed by recurring income would be a good business model to ensure profitability even when the orderbook is completely depleted in bad times.

the downside is that Boustead will be asset-heavy...

and assets must be depreciated and re-valued regularly

hi newbie here, just wondering though assets are to be depreciated over time but if economy is at steady growth rate, wouldn't the re-evaluation increased its value before one dispose of it at a "right" time?

Perhaps MW can answer this ?

I am under the impression that the leased assets are investment properties so there will be no depreciation. Instead it will be revalued annually and changes in the fair value will be recorded in the P&L Statement. If the assets are classified as PPE (Property Plants and Equipments), then it will be depreciated steadily until it reaches its terminal value. Hotel companies classify their hotel assets under PPE so their RNAV is significantly larger than their reported NAV.