Boustead Singapore

[weijian]

We knew that Boustead Prjs used to be a subsidary of Boustead. Boustead spawned it off but still withheld 51%+ of Boustead Prj.

May I ask, when calculating Boustead's equity, eps, pb or pe, should one include the contributions from Boustead Prjs? If not, why is that the case? Its PB based on current price if I include Boustead Prj is 0.75, excluding it is 1.07. Its a big difference in my investing decision.

hi Bibi,
Based on accounting principles, since Boustead owns >50% of BP, Boustead is allowed to consolidate the full results of BP into its own result. This simply means that Boustead can present 100% of BP's results as its own but it doesn't mean it really owns it. Take for example (using durians) - I own 60 trees in this 100-tree orchard and but i decide to show off to my gf. So i bring her to the orchard and what she sees is the entire orchard of 100 trees, but effectively, only 60 of them is mine. When it is time to pick durians that fall down, i can only pick from those 60 trees.

So to answer your question - the minority interest on the balance sheet and P/L needs to be stripped off "non-controlling interests" to reflect the actual picture of what it is worth. The P/B of 1.07 is a closer reflection of the truth to Boustead's valuation by Mr Market.

[Bibi]

Thank you angelzsoul and weijian for your reply. Appreciate it.

[beefjerky]

https://www.fool.sg/2019/07/29/8-highlig...iteds-agm/

1) Wong FF thinks the o&g downturn will last longer. Renewables will slowly reduce demand for oil.  
2) ESRI USA changed renewable terms from 7 years to 3 years.

I am not sure whether this 2 pieces of not so good news causes it to drop. Fidelity funds have been selling for past few days. I think their patience are wearing out. Its been 4 years and Boustead is going nowhere.

Thanks for the reply, appreciate it. Cannot say for certain its going nowhere as I do start to see order books and revenue from individual functions increasing. But its fair to say that due to bad sentiments, the price is suppressed.

[cyclone]

Boustead International Heaters Secures Significant Contract
* Significant contract in region of S$100 million secured for major energy infrastructure development in Europe
* Boustead Group’s order book backlog boosted to S$823 million

Boustead Singapore Limited announced that its wholly-owned subsidiary, Boustead International Heaters Ltd ("BIH") – the Group's largest subsidiary in the Energy-Related Engineering Division – has secured a significant contract with a value in the region of S$100 million from the oil & gas ("O&G") industries. This contract involves the design, engineering and supply of waste heat recovery units (“WHRUs”) for a major energy infrastructure development in Europe.

BIH’s process technologies are increasingly supporting the world’s ongoing energy transition, with fired heater systems and WHRUs used in gas processing and hydrogen production as part of the world’s multi-decade transition to relatively cleaner fuels and renewables. WHRUs capture energy from turbine exhaust and flue gases generated by high temperature processes which would otherwise be lost to atmosphere. This recycled energy is efficiently transferred for use by other utilities, thus reducing the overall energy demand of the plant and increasing operational efficiency.

More details in https://links.sgx.com/FileOpen/Boustead_...eID=575667

[slowandsteady]

FF Wong raised his stake from 36.59 to 41.48 within a day. Does this mean he needs to make a mandatory general offer?

[weijian]

hi slowandsteady,

From what i checked, FF Wong ("buyer") and Chong Ngien Cheong ("seller") are considered as acting in concert with each other, since the latter married the former's sister. Takeover code is based on total holdings of concert parties. So in this case, i think this is like left hand pass to right hand - So i don't think there will be a general offer.

https://links.sgx.com/FileOpen/Boustead_...eID=571943 (pg18)

[slowandsteady]

Thanks weijian. Is it common though for parties acting in concert, especially family members to not include each other's stakes into their deemed interest? I was confused due to the increase in deemed interest, which gives the impression that the total holdings have increased.

[valueinvestor]

Thanks weijian. Is it common though for parties acting in concert, especially family members to not include each other's stakes into their deemed interest? I was confused due to the increase in deemed interest, which gives the impression that the total holdings have increased.

IIRC , only wife or stakes in family holding companies are considered deemed interest .
Also need to cross 50% to have to call for a GO or MO , unless a white wash is obtained from the exchange .

[Bibi]

From https://www.valuewalk.com/2015/12/takeov...singapore/

Mandatory Offers

Mandatory offers are mandatory once certain conditions are met and are an offer for all outstanding shares in the target company.

There are 2 conditions which trigger mandatory offers:

Any person acquires more than 30% voting rights of a company
Any person who holds between 30% to 50% voting rights and acquires more than 1% of additional voting rights within any 6-month period

From another source https://wongpartnership.com › index.php › files › download

Mandatory Offers
Generally, there are no restrictions on an offerer building a significant stake in a target company as long as a mandatory offer is not triggered. The circumstances wherein mandatory offers are triggered are set out in the Take-over Code. Rule 14 of the Take-over Code provides that a mandatory offer is triggered when an offerer acquires, whether by a series of transactions over a period of time or not, shares which, taken together with shares held or acquired by persons acting in concert with it, amount to 30 percent or more of shares carrying voting rights of the target company. A mandatory offer is also triggered when an offerer and persons acting in concert with it hold between 30 percent and 50 percent of the target company’s shares carrying voting rights and acquire in aggregate more than one percent of the target company’s shares carrying voting rights in any rolling six-month period. For these purposes, a person who has acquired or written any option or derivative which causes him to have a long economic exposure to changes in the price of securities will normally be treated as having acquired those securities and persons who would breach the relevant thresholds by acquiring such derivatives must consult the SIC beforehand to determine if an offer is required and if so, the terms of such offer to be made.

[beefjerky]

Based on your post, does this mean that a mandatory offer will be held since the brother in law is not a deemed interest?