Boustead Singapore

[thor666]

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.

Hey muck, thanks for your contribution. I wanted to go to the investor day but was too caught up with work.

For those interested, slides are posted up on sgx:

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

Sent from my D5503 using Tapatalk

[greengiraffe]

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)

There is always a role named Senior Advisor...

[specuvestor]

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)

Interesting training on cost of capital. But Buffett more "ngeow" and does it by lending with market rate interest to the subsi.

[ksir]

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)

Interesting training on cost of capital. But Buffett more "ngeow" and does it by lending with market rate interest to the subsi.

I reckon Mr Wong wouldn't mind to do so as well if not bcos he always wants to keep his elephant (or rather baby elephant) gun dry.
He might be thinking too far ahead (the interest rate would raise sooner rather later), hence the lack of no-brainer opportunities thus far.
However along the way, some bargains did appear: Tongzhou, hankore (divested with 200% gain, absolute number was not too significant though), triple one, japan solar panel, partnership with abu dhabi etc.

As always, when you think too far ahead, it's indifferent to being wrong (at least in short term).

[greengiraffe]

Vision or pure coincidence...

http://boustead.sg/Boustead%20Announceme...onesia.pdf

ACQUISITION OF SUBSIDIARY IN INDONESIA
Singapore, 21 October 2014
The Board of Directors of Boustead Singapore Limited (the “Company”) wishes to
announce that the Company’s wholly-owned subsidiary, Boustead Knowledge Pte Ltd
(“BKPL”) has completed the acquisition of an 80% interest, comprising 24,000 shares of
Rp100,000 each (the “Sale Shares”), in the share capital of PT Mustika Petrotech
Indonesia (“PT Mustika”), a company incorporated in the Republic of Indonesia (the
“Acquisition”).
The cash consideration for the Acquisition was S$372,000 and was arrived at after arm’s
length negotiations on a willing buyer-willing seller basis. The Acquisition was funded
from BKPL’s internal resources.
The principal business activities of PT Mustika are the rental of equipment and provision
of services to oil and gas corporations. The Acquisition is in line with the Company’s
strategy to expand the provision of products and services under the Energy-Related
Engineering Division, specifically for the oil & gas sector.
Based on the management accounts of PT Mustika for the year ended 31 March 2014,
the net book value attributable to the Sale Shares was S$762,000.

http://www.reuters.com/article/2014/12/1...KO20141210

UPDATE 2-Indonesian state oil firm in new push to upgrade refineries
Wed Dec 10, 2014 3:25am EST


Falling oil price to slash energy spending in Indonesia -industry
UPDATE 1-Indonesia plans management shake-up at state power utility-minister
UPDATE 1-Indonesia's Pertamina may get funding for reforms, critics sceptical
ANALYSIS & OPINION
Sapping Energy
Price slump shows it’s time to stop exploring for new sources of oil

* Signs MOUs with Sinopec, Saudi Aramco and JX Nippon Oil & Energy

* Indonesia has struggled to attract investment in refineries

* Plans would double crude processing, triple gasoline output (Updates throughout)

By Fergus Jensen

JAKARTA, Dec 10 (Reuters) - Indonesia's state energy firm Pertamina signed on Wednesday preliminary agreements with global energy firms to upgrade five oil refineries in a new push by the former OPEC member to modernise its creaking energy infrastructure.

President Joko Widodo has launched sweeping energy reforms aimed at curbing corruption and meeting ballooning energy demands.

Pertamina, whose entire board of directors was replaced last month as part of the reforms, signed Memoranda of Understanding (MOU) with China Petroleum and Chemical Corp (Sinopec) , Saudi Aramco and Japan's JX Nippon Oil & Energy Corp.

The firms will first assess the feasibility of the upgrades, with binding agreements expected within six months to bring the refineries up to international standards within four years, Pertamina Chief Executive Dwi Soetjipto said.

"This alone won't be enough to fill the demand gap," Soetjipto said, adding that Pertamina was also looking at building new refineries.

The energy minister has said ageing refinery infrastructure costs Indonesia 10 trillion rupiah ($811 million) a year because processing costs mean global fuel prices are cheaper.

Expanding domestic refineries and storage is also key element of energy proposed reforms, allowing Pertamina to shift to buying petroleum in more stable long-term contracts.

But Southeast Asia's largest economy has struggled to attract investment in its refining sector and its newest facility is 20 years old. Government talks with Kuwait Petroleum and Saudi Aramco stalled last year over tax issues.

"In the past our refinery (investments) were not too economically attractive," Soetjipto said. Pertamina has recently said it would offer partnerships in marketing and other areas to sweeten deals for investors.

Crude supply agreements, however, would remain separate from refinery investments, Soetjipto said, because Indonesia wanted to retain flexibility to find the lowest energy costs.

Indonesia's Refinery Development Master Plan aims to double the country's crude processing capacity to 1.68 million barrels per day from 820,000 bpd at present, Soetjipto said.

According to Pertamina data, the plan aims to more than triple gasoline output from Indonesia's refineries to 630,000 bpd by 2025 from 190,000 bpd in 2012, and more than double diesel output to 770,000 bpd by 2025 from 320,000 bpd in 2012.

Pertamina said it is prioritising the upgrades of the Cilacap refinery in Central Java, Balongan in West Java, and Balikpapan in East Kalimantan.

Pertamina senior vice president for business development, Iriawan Yulianto, said the expected rate of return for investors on the upgrades would be "good" but declined to elaborate.

Michio Ikeda, executive vice president of JX Nippon Oil & Energy Corp, said Indonesia was attractive because its demand for oil products was increasing at up to 5 percent a year, in contrast to declining demand at home. ($1 = 12,328.0000 rupiah) (Editing by Ed Davies)

[specuvestor]

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)

Interesting training on cost of capital. But Buffett more "ngeow" and does it by lending with market rate interest to the subsi.

I reckon Mr Wong wouldn't mind to do so as well if not bcos he always wants to keep his elephant (or rather baby elephant) gun dry.
He might be thinking too far ahead (the interest rate would raise sooner rather later), hence the lack of no-brainer opportunities thus far.
However along the way, some bargains did appear: Tongzhou, hankore (divested with 200% gain, absolute number was not too significant though), triple one, japan solar panel, partnership with abu dhabi etc.

As always, when you think too far ahead, it's indifferent to being wrong (at least in short term).

Interesting comment. Time is a big factor to manage and it actually defines success depending on when you cut-off But businessman have to think much longer term than investors because their vesting is very different.

He sounds like a guy that value investors would like

[ksir]

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)

Interesting training on cost of capital. But Buffett more "ngeow" and does it by lending with market rate interest to the subsi.

I reckon Mr Wong wouldn't mind to do so as well if not bcos he always wants to keep his elephant (or rather baby elephant) gun dry.
He might be thinking too far ahead (the interest rate would raise sooner rather later), hence the lack of no-brainer opportunities thus far.
However along the way, some bargains did appear: Tongzhou, hankore (divested with 200% gain, absolute number was not too significant though), triple one, japan solar panel, partnership with abu dhabi etc.

As always, when you think too far ahead, it's indifferent to being wrong (at least in short term).

Interesting comment. Time is a big factor to manage and it actually defines success depending on when you cut-off But businessman have to think much longer term than investors because their vesting is very different.

He sounds like a guy that value investors would like

Frankly if not bcos of him, I wouldn't be that much into Boustead (at least 10% of portfolio). But then there lies my bias and probably blind spot!!! Lolx

[greengiraffe]

http://infopub.sgx.com/FileOpen/Boustead...eID=327835

Issue price $1.58 for script dividends

The Company will despatch the Notices of Election to eligible shareholders on or around
23 December 2014 (instead of 19 December 2014 as previously announced on 27
November 2014). On or around the same date, the Company will also be making a
separate announcement providing, inter alia, further details relating to the proposed
demerger of its real estate solutions business (as announced on 2 December 2014)
through a distribution in specie to the Shareholders of the shares in Boustead Projects
Pte Ltd held by the Company and the proposed listing of shares of Boustead Projects Pte
Ltd on the Main Board of the SGX-ST by way of an introduction (the “Proposed
Transaction”).

[Musicwhiz]

Boustead has announced the incorporation of two new wholly-owned subsidiaries today - BP-GSK and BP-TM, and these appear to be subsidiaries which derive income from owned or leased properties (i.e. most likely related to DB&L projects). I would hazard a guess that GSK stands for GlaxoSmithKline? I leave other forumers to try to figure out what TM may possibly be.

Separately, Boustead is also featured in this week's issue of The Edge Singapore (with FF Wong's face on the front cover). The article itself does not state anything extra that we do not know, and those who attended the Boustead Investor Day(s) would also be able to discern almost the same information. The de-merger and the REIT plans are separate and will be treated as such.

If Boustead Projects is really welcoming two potential new DB&L tenants, this would grow the portfolio further and bring them one step closer to realizing their REIT ambition.

[thor666]

Tm could be tokio marine.
Maybe a sell and leaseback of the tm building @ raffles?

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