Boustead Singapore

[freedom]

don't get me wrong. I am not saying Boustead is not a good company to invest. actually I am looking to invest into it. But before that, I think it is valid to look for catalysts for the stock to be re-valued although I have not read any great investment book.

and my question earlier was rhetorical question. I don't believe purely high oil price is a catalyst for Boustead. since 2009, oil rebound from below USD 50 to current around USD 100. I only see fewer orders and smaller orders for Boustead til today from 2009. even couting in the lead time (2+ year of lead time? oil price could plunge any time...), it is kinda unaccceptable to say that purely high oil price is a catalyst for Boustead.

I highly suspect that current oil demand is supported by financial demand + speculative re-stocking demand rather than physical demand. that's why so far high oil price has not really brought in huge order books for both upstream and downstream. but it seems getting better in 2011 than in 2010.

I believe when time comes that physical demand supports high oil price like what happened between 2006 - 2008, energy-related business of Boustead will boom, and probably will be revalued greatly.

[Musicwhiz]

Hi freedom,

Thanks, your opinions and comments have been noted. Appreciate your views on the impact of oil prices on Boustead's business.

Let's wait for tomorrow's 3Q FY 2011 results and commentary to see how the recent higher oil prices are affecting the Energy-Related Engineering Division.

Cheers!

[freedom]

is Boustead's real estate solution kinda like property development business?

Boustead Project acquires land, designs and uses construction companies (or themselves) to build property, sells or leases the property after that?

[Musicwhiz]

Yes they develop properties, but it's a niche business as they focus on high-value, high tech properties with Green Mark and other characteristics. Read more about Boustead Projects on their website, and also see some of their clients and properties.

Business Times - 15 Feb 2011

Boustead Q3 net jumps 53% to $13.3 million

By VEN SREENIVASAN

DIVERSIFIED engineering specialist Boustead Singapore boosted its third-quarter net earnings 53 per cent to $13.3 million, thanks largely to strong contribution from its real estate solutions and geo-spatial divisions.

This was achieved on the back of a 23 per cent rise in revenue to $127.7 million for the October-December 2010 quarter.

The Q3 FY11 financial results lifted net profit for the nine months to end-December 84 per cent to $53.3 million, beating the previous year's full-year earnings of $43.1 million, and virtually ensuring that Boustead will surpass its 2009 profit of $60.1 million.

Revenue for the April- December period rose 34 per cent to $450.5 million.

The company's two core segments, Engineering Services and Geo-Spatial Technology, did well during the quarter.

Sales of software and professional services to government agencies in Australia and South-east Asia boosted the Geo-Spatial Technology unit's Q3 revenue 20 per cent to $21.7 million. Analysts believe this division could see increased demand following the massive floods in Australia recently.

The Real Estate Solutions Division recorded a 69 per cent rise in revenue to $71 million, driven largely by the ongoing construction of the 62,000 square metre manufacturing facility for Rolls-Royce's wide- cord engine fan blade and civil aero engine projects at Seletar Aerospace Park.

The Energy-Related Engineering Division achieved flat revenue at $27.7 million, while its Water & Wastewater Engineering Division (that is, Boustead Salcon Water Solutions) saw a 52 per cent fall in revenue to $7.2 million during Q3 as many projects were in their infancy.

Boustead also restructured its joint venture in Libya, reducing its stake to 35 per cent, with its JV partner General Construction & Building Company (Libya's largest government construction company) holding a 65 per cent interest. Boustead is expected to incur a net loss of $1.1 million from the restructuring.

The company had a net cash position of $173.2 million as at end-December 2010.

'Our strong financial performance in the first nine months has allowed us to surpass the revenue and net profit achieved for the whole of FY2010,' said Wong Fong Fui, chairman and group CEO. 'Having successfully restructured the JV in Libya and won recent new contracts worth $55 million, we feel fairly confident of our prospects particularly as we see a very healthy pipeline of enquiries.'

Mr Wong added: 'Although our previously announced negotiations for the acquisition of Bio-Treat and long-term investment in the 'Big Box' project with TT International Ltd have not materialised as planned, we continue to seek other strategic opportunities to deploy our sizeable net cash balance of $173.2 million.'

[freedom]

Thanks, MW.

just want to understand their business more before really investing into it.

[Jon-san]

Wow, think this is the first time I'm reading that FF Wong is "fairly confident of our prospects". He is generally under-promising and over-delivering. Let's hope he makes some meaningful use of their sizeable war chest soon.

[Musicwhiz]

Wow, think this is the first time I'm reading that FF Wong is "fairly confident of our prospects". He is generally under-promising and over-delivering. Let's hope he makes some meaningful use of their sizeable war chest soon.

Yes, actually I wish he would remain low-key! Haha. But probably they do have some targets and enquiries have really been flowing in, so he feels optimistic enough to give such an assessment.

Still, me being a conservative investor, I would not expect anything more than the 2.5c final dividend which was paid out for FY 2010. (Note that a 1.5c special dividend was also paid in FY 2010)

[valuestalker]

understated net cash balance of $173.2 million ??
I believe there is 26.9 million "Held for trading investments", which is cash equivalent?
To get better yield on idle cash?

[Musicwhiz]

understated net cash balance of $173.2 million ??
I believe there is 26.9 million "Held for trading investments", which is cash equivalent?
To get better yield on idle cash?

Yes, I suspect (but cannot confirm) that the money may be placed in a Money Market Fund (MMF) which yields better than FD. But this war chest of money can be deployed easily should there be more juicy investment opportunities which can generate recurring revenues and cash flows for the Group.

[freedom]

is money market fund cash equivalent?

maybe the investment is some corporate bonds or equity stake.