Boustead Singapore

[AlphaQuant]

"METHOD OF FINANCING
The Purchase Price will be funded through internal resources of the Group, external investors and bank borrowings."

does this imply placements coming soon?

[felixleong]

can be pref shares also?

[NTL]

Good news... yield accretive and NTA enhacing acquisitions:

i) http://infopub.sgx.com/Apps?A=COW_Corpor...7.2013.pdf

The purchase price of the Property is S$39,360,000 (the "Purchase Price"), which was arrived at on a willing-buyer and willing-seller basis and after taking into account the open market valuation of the Property. The open market valuation of the Property is S$44,600,000 based on a valuation dated 28 June 2013 commissioned by the Purchaser and conducted by Colliers International Consultancy & Valuation (Singapore) Pte Ltd (the "Valuer"). The valuation was based on the Income Capitalisation Approach and the Discounted Cash Flow Analysis.

ii) http://infopub.sgx.com/Apps?A=COW_Corpor...seback.pdf

Asset Value. Based on the latest announced unaudited consolidated financial statements of
the AGL Group for the nine months ended 31 March 2013, the book value and the net tangible
asset value of the Property was S$21.7 million.
AGS has commissioned a valuation of the Property by Knight Frank (Singapore) Pte. Ltd.
Knight Frank (Singapore) Pte. Ltd has ascribed an open market value of S$28.8 million as at
30 June 2012 to the Property (on a vacant possession basis and excluding all plant and
machinery and overhead cranes, but including the waterfront with an area of approximately
66,607 square feet).

4. LEASEBACK
Upon Completion, AGS shall lease the Property from the Purchaser under a lease agreement (the
“Lease Agreement”).
The principal terms of the Lease Agreement include, amongst others, the following:
(a). the duration of the lease will commence on the date of Completion and end on 14 May
2025 and AGS has the option to renew the lease for an additional further term of 5 years
subject to the terms of the Lease Agreement;
(b). the rent payable to the Purchaser will be the aggregate of (i) a base rent of approximately
S$3.0 million per annum; and (ii) a land premium rent being 6% of the upfront land
premium that JTC requires the Purchaser to pay for the Property, subject to increases in
the rent as specified under the Lease Agreement; and
©. AGC Australia Pty Ltd, another wholly-owned subsidiary of the Company, as well as the
Company, will guarantee the due and punctual performance by AGS of all the obligations
on the part of AGS to be observed and performed under the Lease Agreement and
indemnify the Purchaser on the terms set out in the corporate guarantees to be given by
AGC Australia Pty Ltd and the Company to the Purchaser on Completion.

This time looks like fast hand, fast leg and the intention to be more aggressive with the huge cash hoard...

HU8TPPY
Vested
GG

The landlease is 30+30 from 1995. 1st expiry at 2025. If the lease is not extended, then they will be paying $39M for ($3M x 12)=$36M?

Please correct me if I am wrong...

[shn]

I think the value is in here:

2. INFORMATION ON THE PROPERTY
... The Property is held under a lease issued by Jurong Town Corporation ("JTC") for a term of 30 years commencing on 16 May 1995 with a covenant by JTC to grant a further term of 30 years subject to the terms and conditions of the lease.

5© There is significant redevelopment potential in the Property’s current underutilised plot ratio of 0.38. The allowable plot ratio is 1.0 and represents an additional 198,300 sf of untapped plot ratio. This additional plot ratio capacity allows for the Company to support Ausgroup should Ausgroup elect to expand the plot ratio usage of the Property in future expansion endeavours on site as well as to potentially redevelop the whole Property upon Ausgroup’s lease expiry.

[wcpk90]

Let us look at from AusGroup's point of view instead: By selling at a lower price than open market valuation, they would undoubtedly benefit from a lower rental rate. The rationale for AusGroup selling is "AusGroup intends to deploy the net sale proceeds from the proposed sale towards the reduction of
bank borrowings, to facilitate other corporate funding requirements and for general working capital requirements."

Whereas Boustead 's rationale for this purchase is to move closer to unlocking its property portfolio and also increase recurrent rental income.

Still, management highlighted that there are a few options they are going to explore to unlock value that being:
1) Organic growth model – search for clients who need the facility
2) Look and buy potential existing Property for redevelopment potential.
3) Work with family office that have the cash but no pipeline of projects
4) Look at other partners who have development portfolio already to unlock together.

and of course the stapled reits model.

Seems like this is the number 2 option. Still quite far off from the 2-3X GFA needed. But Boustead is slowly progressing there

[specuvestor]

Question: What's the benefit of a stapled REITS to the issuer, instead of a normal REIT spinoff?

[NTL]

Reading AusGroup posting gives more insight.

The purchase is only be carried out if the following conditions are met:

(vii). the Purchaser obtaining written confirmation from JTC that:
(i) the fixed investment criteria under the relevant JTC lease documents (the “JTC Lease”) has been complied with; and
(ii) the Vendor is entitled to the grant of a further lease term of 30 years and under the terms of the JTC Lease.

So I am the stupid one...

Interestingly, the value of the property had raised a lot over this 1 year period. Valuation carried out by AusGroup was $28.8M one year ago, compare to $44.6M done by Boustead.

[greengiraffe]

Good news again...

Design, build and lease in Mandai:

http://infopub.sgx.com/Apps?A=COW_Corpor...7.2013.pdf

[greengiraffe]

2013 AR is out:

http://www.boustead.sg/Annual%20Reports/...3%20AR.pdf

Highlights:

i) To be fair, the record net profit for FY2013 was boosted by
several items which were bonuses to the Group. After waiting
patiently for a response to tax evaluations on assets which had
been sold eight years ago, the tax authorities finally concluded
evaluations in our favour, resulting in S$8.3 million in writebacks
of tax overprovisions and a tax refund – certainly worth
the wait. In addition, we registered a S$5.8 million gain on the
disposal of an available-for-sale investment in a self-storage
business, selling it for nearly double our investment, just another
small example of the Group’s ability to unlock value over
the years. Lastly, before the end of FY2013, we received the
Temporary Occupation Permit for a S$38 million building which
had been scheduled to be completed and sold only in FY2014.
Due to our expertise in fast-track design and construction,
the delivery of the building and subsequent completion of the
sale and purchase agreement took place in FY2013 instead and
resulted in an early pay cheque from the client.

ii) Since recommencing annual dividend payments in FY2003,
we have paid out an average of 46% of our earnings,
a decent level which is in fact higher than the average
for the S&P 500.

iii) Despite the fact that global financial markets may have
difficulty with our four divisions, we would rather not follow
the path of rationalisation for the sake of rationalisation.
Instead, our focus will be on building value in our four divisions
and unlocking that value on our own set of terms so that
shareholders are not short changed. The various options
including divestments, mergers and spin-offs of any of our
four divisions can only take place at the right price, right size
and right time.

iv) Letting Go and Looking Forward
Having held onto our investment in ASX-listed OM Holdings
Ltd (“OMH”) for slightly over a year, we decided to part with this investment that looked so promising at the beginning
that I once used the term “blue sky” to describe it.
When a relationship is not going as planned and one is not
in the driver’s seat, then difficult decisions like separation need
to be made. The fortunate part was that we managed to exit at
a price in excess of our initial investment, chocking up a slight
profit in the process.

v) In FY2013, we made two investments with longer gestation
periods. First, we pumped S$20.1 million into a 4% stake
in the first phase of a promising mixed development at the heart of Tongzhou, the next central business district of
Beijing. The projected development cost for the first phase
is RMB15,800 per square metre of gross floor area, a very
attractive price that provides a good margin of safety and
plenty of upside. Second, we entered into a joint venture
for utility-scale solar power plant projects in Japan, a small
start-up with the potential to generate long-term recurring
income. We are looking into building up a renewable energy
asset portfolio that could be made up of assets such as solar
power and hydro power, along with any other interesting
renewable source that comes along.

vi) Although we won just one design-build-and-lease deal in
FY2013 with Jabil, a Fortune 500 corporation, we still have
funds earmarked for the expansion of our industrial leasehold
portfolio. We would like to bring this portfolio far beyond the
current 101,000 square metres. We will continue to actively
explore several options to unlock the value of the portfolio.

[Contrarian]

It's an EXCELLENT annual report. Very well crafted and detailed.