Boustead Singapore

[LionFlyer]

It's over 10years already and I don't think Mr Wong is going to change his stand soon (if ever).

<vested, near core>

Holding excessive cash is not really effective capital management and conventional wisdom says you should either return it to the shareholders or spend on acquisition. After holding Boustead for around 10 years, I'm resigned to the fact that this would depend on the next generation of leaders after FF Wong. If he wanted to return the money or spend it, there were opportunities to do so during that period.

[Bibi]

Is Google Map a competitor to Boustead Geospatial solutions ESRI?

https://www.g2.com/compare/esri-arcgis-v...e-maps-api

Google Map used to have a version for Corporate customers, but was ditched a few years ago and IIRC they have asked (or facilitated) the customers to switch to ESRI.

https://www.esri.com/en-us/landing-page/...p/overview

Nice. Thank you.

[Curiousparty]

I am interested in the geo spatial segment.

Over the past 5 years, revenue has grown CAGR of 11% and profits before tax by 14%. It shows that due to operating leverage, net profits can grow faster than revenue.

If it follows the P/E of software companies, the valuation can range from 15-20 times of current earnings which is slightly more than the current market cap of Boustead Singapore.

<vested>

May I ask where did you get the PE ratios of the software companies?

Boustead's geo-spatial segment is essentially a monopoly services - should merit the higher end of the PE ratios??

[D123]

I am interested in the geo spatial segment.

Over the past 5 years, revenue has grown CAGR of 11% and profits before tax by 14%. It shows that due to operating leverage, net profits can grow faster than revenue.

If it follows the P/E of software companies, the valuation can range from 15-20 times of current earnings which is slightly more than the current market cap of Boustead Singapore.

<vested>

May I ask where did you get the PE ratios of the software companies?

Boustead's geo-spatial segment is essentially a monopoly services - should merit the higher end of the PE ratios??

First of all, they only own 88% of the subsidiaries operating the geo-spatial business, so you'll have to add a 12% discount to any valuation.

Second, there is a non-zero chance that they will lose the distributorship (l know I know, it's a very low probability). But if that happens, your valuation for this segment will not settle at any P/E ratio. It will be zero.

[Curiousparty]

I am interested in the geo spatial segment.

Over the past 5 years, revenue has grown CAGR of 11% and profits before tax by 14%. It shows that due to operating leverage, net profits can grow faster than revenue.

If it follows the P/E of software companies, the valuation can range from 15-20 times of current earnings which is slightly more than the current market cap of Boustead Singapore.

<vested>

May I ask where did you get the PE ratios of the software companies?

Boustead's geo-spatial segment is essentially a monopoly services - should merit the higher end of the PE ratios??

First of all, they only own 88% of the subsidiaries operating the geo-spatial business, so you'll have to add a 12% discount to any valuation.

Second, there is a non-zero chance that they will lose the distributorship (l know I know, it's a very low probability). But if that happens, your valuation for this segment will not settle at any P/E ratio. It will be zero.

good

There is a low chance that Boustead will go bankrupt too. Any valuation would thus be quite meaningless...haha...

There is also a chance (albeit very low) that some banks may lose their coveted banking license from MAS right?

[Curiousparty]

It's over 10years already and I don't think Mr Wong is going to change his stand soon (if ever).

<vested, near core>

Holding excessive cash is not really effective capital management and conventional wisdom says you should either return it to the shareholders or spend on acquisition. After holding Boustead for around 10 years, I'm resigned to the fact that this would depend on the next generation of leaders after FF Wong. If he wanted to return the money or spend it, there were opportunities to do so during that period.

Mr Wong has made it no secret that he is willing to wait and be patient to make the right acquisitions and investments.  It has been communicated in his messages over the years as well.  He is similar in mentality and philosophy to Warren Buffett, so that is the way that he views business, M&A and investments, with an extremely long view.

Based on Mr Wong and the senior leadership team’s track record, when value is unlocked, our shareholders have been significantly rewarded as well.  Examples include:

• The distribution of EasyCall International Ltd by dividend-in-specie in 2006.  EasyCall was turned around by Boustead through the establishment of Tianjin University of Commerce Boustead College as a full-fledged university in 2002, pivoting away from EasyCall’s sunset paging business.  In 2006, the share price of each EasyCall share at distribution was about 7.8 Singapore cents.  In that same year, we thereafter placed out EasyCall shares to Raffles Education and the share price peaked at 80 cents before being privatised by Raffles Education at 50 cents.  For shareholders who held on and divested during the peak or even at privatisation, they would have been greatly rewarded.

• The distribution of Boustead Projects Ltd by dividend-in-specie in 2015.  The implied share price of each Boustead Projects share based on NAV at distribution was about 58 Singapore cents.  We are already seeing the value creation with current NAV of S$1.37 and the establishment of Boustead Industrial Fund, not to mention that RNAV would be at higher levels.  Again, shareholders who held on would have been greatly rewarded.

• The growth all of the other major divisions significantly over the time period from 1996 until present day.  Mr Wong entered Boustead at about 26 cents per share, paying a premium of more than 2x to enter because he believed in the Boustead brand name acquired and ability to create value using the Boustead brand name.  Shareholders who entered Boustead at exactly the same time would have been greatly rewarded with the cash dividends, dividends-in-specie, share buybacks and capital appreciation over that period.

Mr Wong would be the largest beneficiary if higher dividends were paid out.  However, he has always kept in mind the sustainability of businesses and value creation.  While more dividends could be paid out, it would be unwelcome to shareholders if we need to call for more capital when we come across the right opportunity.

Hope that helps to explain Mr Wong and the senior leadership team’s philosophy.

[D123]

good  

There is a low chance that Boustead will go bankrupt too. Any valuation would thus be quite meaningless...haha...

There is also a chance (albeit very low) that some banks may lose their coveted banking license from MAS right?

Didn't realize I had to spell out the obvious, but here goes.

The chance of a good bank losing its licence is similar to other good banks, so comparing valuation ratios make some sense as this risk is factored in all of their prices.

If by tech stocks you mean FAANMG or other similar software-based businesses relying on the Internet for low-to-zero marginal costs and low-to-zero distribution costs, then they are not a good comparable for Boustead's Geospatial segment given they own their technology and Boustead doesn't. Workday is obviously not a good comparable for TietoEvry or Alight.

[Bibi]

I signed up for its AGM but forgotten about it.

Anybody has any insights on why Wong Yu Loon has a rather poor vote for him to be re-elected? Is he not as capable? I thought he is the one gonna take over Mr Wong FF.

Ordinary Resolution 4: Re-election of Mr Wong Yu Loon as a director of the Company
For: 76.63%, Against: 23.37

[¯|_(ツ)_/¯]

boustead@119
mgt ppt at 2021 eAGM
https://links.sgx.com/FileOpen/Boustead%...eID=676287



Stay home and stay safe, everyone.

[Curiousparty]

Geospatial growth

The geospatial division has in recent years been one of the top contributors to Boustead' s profit before tax (PBT). Boustead exclusively distributes Esri' s ArcGIS technology - a leading geographic information system (GIS) smart mapping and location analytics platform - in major Asia-Pacific markets such as Australia, Singapore, Malaysia and Indonesia. Esri' s software facilitates smart infrastructure for cities and communities.

Covid-19 has generated demand for GIS technology in the government and healthcare sectors, to assess, monitor and manage the impact of the pandemic.

Revenue for the division has grown from S$103 million in FY2016 to S$170.4 million in FY2021 - a compounded annual growth rate of 10.6 per cent. The division is also profitable, with high margins.

PBT grew 37 per cent on year to hit S$40.7 million, and PBT margins stood at 23.9 per cent. The deferred services backlog has grown to a record of S$100 million as at end-March.

Boustead said organisations in Australia and Indonesia have also requested for complimentary short-term access to the software for crisis and disaster management solutions.

Some of this could lead to conversions for revenue generation in future. With the trend of smart cities growing, the geospatial division may be able to see sustained tailwinds in the years to come.