Boustead Projects

[greengiraffe]

The problem now is not about having $.

Boustead Projects is not a new company. It is part of Boustead Sing until the free spin-offs. Boustead Sing and Projects all these have the money and the expertise.

Perhaps due to conservatism, they didn't manage to build a portfolio sizable for REITing.

It appears that due to conservatism, competition in both contracting and ownership has also intensified.

Even for newer projects, the acceptable return of newer ownership type of projects have also declined.

Being in the business, they have little choice but to keep bidding for new projects, otherwise how do you expect to maintain a team of talents?

Honestly, you have all the $. However, given the state of economy and the adequate supplies of ind properties in Singapore, the outlook will be very tough with formidable competitors like Ascendas, Mapletree and other smaller competitors that has a REIT pipeline.

I maintain my view that BP is a next cycle story. Keep digging but I doubt that you will dig out something that many are unlikely to know.

More than decade long vested in Boustead with autographed share certificate
GG

[Curiousparty]

This is the type of company Warren Buffett would probably own. No further comments. tks.

[Curiousparty]

think you got your recurring income wrong

You have probably looked at half yearly figures.

The recurring income should be ~$24mil per annum.
They have close to 2mil sq ft of industrial space.

u are indeed very curious...

Boustead Projects needed these new contracts to cover their fixed costs and sustained earnings.

There is no doubt a recurrent rental income. However, that amount is around $10+m.

Comparison to REIT is not appropriate as their asset base is insufficient else they would have gone for a REIT.

The space that BP is operating in now is highly competitive - indicated from previous Boustead guidance.

Personally, I think BP is a next cycle story as under current conditions, it is difficult for it to acquire and expand - otherwise they would have done so already.

Vested
Odd Lots
GG

First thing first, Market cap of only ~$300mil but the book order is ~$296mil*.
*it has just announced a $34mil design and build contract tender win today.

RNAV = ~$1.26 (today's tender win of $34mil not reflected yet).

With its Design and Build and lease back model, it would have a stable recurring income base.
Based on the 1H 2015 net income figures, the full year EPS is likely to be ~9 cents. Soilbuild Business Space REIT is trading at around P/E of 15. If we apply this to Boustead Project, it should be trading at ~$1.35.


With such a "low base" market cap, a big tender win (e.g. through strategic partnership with Abu Dhabi's sovereign wealth fund) would easily lift its RNAV and hence market cap accordingly.

[greengiraffe]

How I wish I can read income statement like you - rev cannot be taken as 100% flow through to bottomline...

Buddy, u forgotten about your expenses...

Aiyo...

confused GG

think you got your recurring income wrong

You have probably looked at half yearly figures.

The recurring income should be ~$24mil per annum.
They have close to 2mil sq ft of industrial space.

u are indeed very curious...

Boustead Projects needed these new contracts to cover their fixed costs and sustained earnings.

There is no doubt a recurrent rental income. However, that amount is around $10+m.

Comparison to REIT is not appropriate as their asset base is insufficient else they would have gone for a REIT.

The space that BP is operating in now is highly competitive - indicated from previous Boustead guidance.

Personally, I think BP is a next cycle story as under current conditions, it is difficult for it to acquire and expand - otherwise they would have done so already.

Vested
Odd Lots
GG

First thing first, Market cap of only ~$300mil but the book order is ~$296mil*.
*it has just announced a $34mil design and build contract tender win today.

RNAV = ~$1.26 (today's tender win of $34mil not reflected yet).

With its Design and Build and lease back model, it would have a stable recurring income base.
Based on the 1H 2015 net income figures, the full year EPS is likely to be ~9 cents. Soilbuild Business Space REIT is trading at around P/E of 15. If we apply this to Boustead Project, it should be trading at ~$1.35.


With such a "low base" market cap, a big tender win (e.g. through strategic partnership with Abu Dhabi's sovereign wealth fund) would easily lift its RNAV and hence market cap accordingly.

[Curiousparty]

I thought we are talking about topline recurring revenue.

"There is no doubt a recurrent rental income. However, that amount is around $10+m."


Assuming full year recurring revenue of $24mil, how do we know that only 50% of this $24mil will become the net income?

any basis?

[greengiraffe]

U are always so curious and u are much more intelligent than many of us...

U just tell us yr answer lor...

What is your fair value of BP

interestingly u no longer selling koyok on new toyo...

I m vested
Odd Lots and Share certificate

What about your position...

GG

I thought we are talking about topline recurring revenue.

"There is no doubt a recurrent rental income. However, that amount is around $10+m."


Assuming full year recurring revenue of $24mil, how do we know that only 50% of this $24mil will become the net income?

any basis?

[getrich]

FULLY VALUED.

NO MARGIN OF SAFETY AT CURRENT PRICE.

PASS.

[Curiousparty]

Potential Recurring revenue = 2mil sq ft x 1.8 PSF x 12 mth = ~$43mil
Assuming NPM (net profit margin) for recurring revenue of 50%, recurring net income = ~$21.5mil or recurring EPS 6.7 cents or dividend yield of 7%!!!

Hence, Boustead Project is already very attractive EVEN before considering its development profits.

___________________________________________________
U pay $300mil market cap to get:-
a. $500mil (potential market valuation* of industrial properties)
b. Potential recurring revenue = 2mil sq ft x 1.8 PSF per mth x 12mth = ~$43mil (per annum)
c. Strategic partnership with sovereign wealth fund, etc.
d. Diversification into commercial/retail property development
e. Development profits from design and build projects

________
*2mil sq ft (roughly) x $250 PSF (conservative) = $500mil (potential market valuation).
Why conservative? 30-year leasehold is already selling at $377 PSF in Q1/2015.

[Nick]

Potential Recurring revenue = 2mil sq ft x 1.8 PSF x 12 mth = ~$43mil
Assuming NPM (net profit margin) for recurring revenue of 50%, recurring net income = ~$21.5mil or recurring EPS 6.7 cents or dividend yield of 7%!!!

Hence, Boustead Project is already very attractive EVEN before considering its development profits.

___________________________________________________
U pay $300mil market cap to get:-
a. $500mil (potential market valuation* of industrial properties)
b. Potential recurring revenue = 2mil sq ft x 1.8 PSF per mth x 12mth = ~$43mil (per annum)
c. Strategic partnership with sovereign wealth fund, etc.
d. Diversification into commercial/retail property development
e. Development profits from design and build projects

________
*2mil sq ft (roughly) x $250 PSF (conservative) = $500mil (potential market valuation).
Why conservative? 30-year leasehold is already selling at $377 PSF in Q1/2015.

Considering FY 14 revenue for the leasing division was $21.8 million (gross margin: 77%) and 1H 15 revenue of $12.4 million (gross margin: 74%), won't $43 million revenue seem a pretty big stretch ? If your assumptions are true, then the more pertinent question would be why purchase a company whose management is willfully leasing out valuable properties at substantial discounts ?

Personally, I don't think the Management is foolish (judging by their stellar track record in Boustead SP) so its more likely that the rental revenue posted in the financial results do reflect market rates. I don't imagine rents simply doubling up overnight especially when they are on long term leases with some escalation clauses. Hence, the assumptions behind $43 million leasing revenue may not be true.

(Not Vested)

[greengiraffe]

Your skills in reading financial statements are simply beyond me...

I personally don't know how you arrive at $500m when valuers have already done their valuation - are you questioning valuers competence?

As it is there is no shortage of supply of industrial facilities... If indeed they can simply leased out at the rates you assume and can get tenants, they would have accelerated their hunt and secure tenants as you have rightly assumed.

I have previously said - $ is never an issue even when BP was alone. Their tie-up with a SWF lent them an extra edge - a non monetary benefit it seems. BP for a start has cash on the books and unutilised bank lines. Its the ability to secure clients with an acceptable return on each project in view of the heightened competition which is the real issue.

BP has minor stakes in the retail/commercial developments - there is a legacy from Boustead Sing days and reflects the conservative approach to wet their feet in new areas - contributions will be insignificant.

Recurrent D&B margins are thinning and hence the project flows have been slowing in view of heighten competitions.

Lastly, BP is not a new entity even though it is newly listed via introduction.

Your speculations would have been better addressed if you do your research via Boustead Sing threads accumulated over the years.

As usual, you have yet to state your position in either parent or child - that goes against the spirit of this forum IMHO especially when you are actively discussing on a stock.

Anyway, if you were right, you would have started this debate back in 2011/12 when many other buddies and I have been saying how Boustead Sing was unappreciated and undervalued. In terms of reading the cycle at least from ind prop in Singapore, I m sad to say that you appear way off the mark.

I suggest you read up all the facts that you can gather before firing blanks for your own views.

Vested since 2002
GG

Potential Recurring revenue = 2mil sq ft x 1.8 PSF x 12 mth = ~$43mil
Assuming NPM (net profit margin) for recurring revenue of 50%, recurring net income = ~$21.5mil or recurring EPS 6.7 cents or dividend yield of 7%!!!

Hence, Boustead Project is already very attractive EVEN before considering its development profits.

___________________________________________________
U pay $300mil market cap to get:-
a. $500mil (potential market valuation* of industrial properties)
b. Potential recurring revenue = 2mil sq ft x 1.8 PSF per mth x 12mth = ~$43mil (per annum)
c. Strategic partnership with sovereign wealth fund, etc.
d. Diversification into commercial/retail property development
e. Development profits from design and build projects

________
*2mil sq ft (roughly) x $250 PSF (conservative) = $500mil (potential market valuation).
Why conservative? 30-year leasehold is already selling at $377 PSF in Q1/2015.