Boustead Singapore

[LionFlyer]

Didn't have a chance to go to the Investor Day, but here are the slides.

http://infopub.sgx.com/FileOpen/Boustead...eID=267568

Question to those who went, was anything shared about the joint development in Iskandar?

[Andrew Q]

Didn't have a chance to go to the Investor Day, but here are the slides.

http://infopub.sgx.com/FileOpen/Boustead...eID=267568

Question to those who went, was anything shared about the joint development in Iskandar?

The Iskandar project is a Joint Venture with Tat Hong and 2 other company. Boustead had a stake of 35% in this JV. Their involvement will be on managing the project development and finding tenants for it.

This project will not be involve in the coming REITs of Boustead.

[greengiraffe]

Boustead CIMB initiated with ADD:

Ignite the four-wheel drive

We are turning positive on all the four divisions of Boustead. In
particular, the group’s plan to launch an industrial REIT and the high
demand for its energy-related engineering services are the key
catalysts ahead.
The group has a bright overall outlook.
Its real estate division plans to launch
a REIT. Energy-related engineering
order book backlog is near record
high. The water division is becoming
less of a drag while its geo-spatial
division will resume steady expansion.
We initiate our coverage on Boustead
with an ADD rating and an
SOP-based target price of S$1.94.
Jumping on the REIT
bandwagon
We are positive on Boustead’s move
to launch its own REIT as this will 1)
provide it a convenient vehicle to
unlock its hidden value and recycle
capital; 2) entitle Boustead to a steady
stream of recurring income from
asset management fees; 3) benefit
investors with tax-free incentives if
the REIT pays out over 90% of its
distributable income. Boustead’s
current leasehold portfolio stands at
0.163m sq m GFA, still far from the
size of 0.3m sq m that management is
comfortable with (before it launches
the REIT). We note that the progress
could be accelerated by acquisition of
assets, to be fuelled by Boustead’s
strong cash on hand and the recently
established S$500m debt issuance
programme. The REIT is likely to be
launched within the next 2-3 yrs, in
our opinion.
Soar with the North American
Energy Boom
The energy-related engineering
division has secured S$140m worth of
contracts since the start of FY14,
trumping the S$111m it secured for
the whole of FY13. Its order book
backlog currently stands at S$171m,
close to its all-time high. The
momentum of oil & gas investment is
expected to extend into the medium
term on the back of robust energy
prices and the tepid recovery of the
world economy.
Attractive valuation
Our SOP-based target price of S$1.94
implies a 16.2% upside from the
current price of S$1.67, on top of the
3.0% dividend yield. Our valuation
has not included a potential gain from
its investment in Beijing Tongzhou
development, new asset management
business post the planned launch of
the REIT, and potential new business
opportunities following its recent
foray into Iskandar Malaysia.

[greengiraffe]

BOUSTEAD SINGAPORE (BOCS SP), UOB KH initiated coverage with BUY, Target $1.94:

Cash-Rich Think Tank
Boustead Singapore (Boustead) has four main business segments. It is an engineering
firm for industrial real estate, energy and water plants, and is an exclusive distributor of
a widely-adopted geographic information system (GIS) in Australia and South Asia. The
group specialises in value engineering – offering project management, design and
consulting services that realise cost and time savings for customers, while outsourcing
construction requirements. Its GIS technology is used by both government and nongovernment
entities, where Boustead holds an aggregate 80% share in its markets.
Recently, the group has also focused on building its industrial leasehold portfolio with
plans to transfer them into a REIT in the future.
INVESTMENT HIGHLIGHTS
 Initiate coverage with a BUY; target price of S$1.94 represents 17% price
upside. Our target price is based on a SOTP model. We like Boustead’s high net
cash position (25% of its current market capitalisation) that we think the market has
not fully accounted for. Its cash-generative geo-spatial business will continue to
dominate its markets while recurring rental income from its growing industrial
portfolio will mitigate potential weakness in the industrial property space. The energy
division’s global reputation will draw projects from the US shale gas boom and strong
regional demand. The group pays out 5 S cents of ordinary dividend annually (3%
yield). Our fair value implies a FY15F PE of 17.5x (ex-cash 14x, ROE 17%).
 Business model requires low capital intensity as the group outsources the highrisk
construction and fabrication component of its projects. We think construction
firms are threatened by rising raw material and labour costs, and face intense
competition from foreign contractors. We like Boustead’s focus on management,
design and engineering, which partially insulates it from the risk of cost overruns and
heavy capex. The group budgets an annual maintenance capex of S$5m in
comparison to operating cash flows that averaged S$60m in the last six years.
 Scaleability is an advantage and an opportunity as Boustead’s engineering
solutions can be applied to a wide range of businesses in each respective industry
and its capacity is unbounded by raw material constraints. We think the group can
ride on the energy upcycle with its available resources and it will be able to support a
high single-digit growth in its GIS solutions-based geo-spatial business. Its expertise
in industrial developments can also be applied to commercial, residential and
hospitality, where it has already made inroads.
 M&A opportunities in energy and real estate divisions that could provide
synergies to the group. We would look more favourably on deals that would fall under
Boustead’s four business segments rather than a new sector. We also agree with
management that potential targets or partners must have good cash flow,
management involvement and be earnings-accretive. Funding for future M&As will be
supported by its strong cash balance and S$500m MTN programme.
 Key risks include cyclical risk, foreign exchange risk, execution risk, shortage in
skilled talent and political risk in Libya.

[Wildreamz]

I'm impressed with how Chairman and CEO Wong Feng Fui manages to manage the business and assets of Boustead so well year after year to increase shareholder value.

Philip Fisher once said that outstanding companies are either "fortunate and able" or "fortunate because they are able". Boustead is certainly the latter.

Kudos to Mr Wong.

[greengiraffe]

Interestingly enough, all the salutes to Mr Wong came recently - after Boustead share price strongly outperformed in 2013.

Sometimes I really wonder if the share price did not perform just like during 2011 - 2012, would we have seen so much new coverages.

As a shareholder for more than a decade, I have seen the strategy firmly in place for the same period. Unfortunately, only from 2013 did Boustead really seen its fruits of labour recognised.

Got to be the share price. If it doesn't perform, shareholders will always be asking "GOD" what will take the "DOG" to perform...

Vested
GG

[Wildreamz]

I believe most shareholder agree that Mr Wong is one of the best asset that Boustead has, besides its Geo-spatial engineering business, lol. Got to give some credit to its Industrial Engineering division too.

[greengiraffe]

Never disputed that. Business aside, his business approaches has the Warren Buffet traits - focus on cashflow generation not merely exciting market with accounting earnings.

Vested

I believe most shareholder agree that Mr Wong is one of the best asset that Boustead has, besides its Geo-spatial engineering business, lol. Got to give some credit to its Industrial Engineering division too.

[greengiraffe]

http://infopub.sgx.com/FileOpen/Boustead...eID=274538

No surprises here. Oil & gas is the star performer. Unlocking ind real estate portfolio will be interesting given the negative sentiment towards REIT as a whole recently and the ability to acquire assets at reasonable valuations remains questionable in the light of still bubbly asset price environment.

Vested

[greengiraffe]

http://infopub.sgx.com/FileOpen/Boustead...eID=275555

http://www.crescendas.com/

PROPERTY
63 Ubi Avenue 1 #06-01
Singapore 408937
Email : property@crescendas.com
Tel : (65) 6692 6988 / (65) 6692 6880
Fax : (65) 6488 4555

Crescendas apparently is the buyer of the strata title units that was formerly Boustead's HQ before its relocation to present premises at Starhub Green.

http://www.boustead.sg/Boustead%20Announ...idiary.pdf

Crescendas has a diversified property portfolio:

http://www.crescendas.com/business-portf...perty.html

Of which I suspect the following divisions could dovetail nicely with Boustead Projects existing portfolio for a potential setup of a REIT:

i) http://www.crescendas.com/business-portf...rties.html

ii) http://www.crescendas.com/business-portf...rties.html

iii) http://www.crescendas.com/business-portf...rties.html

As for the split of 55/45 between the jv partners - it could well be indicative of the valuations of the properties that the REIT will be holding injected by either partners.

Vested
GG