Boustead Singapore - CGS-CIMB Research 2020-07-14: Solid Results Amid Challenging Landscape

BOUSTEAD SINGAPORE LIMITED (SGX:F9D) | SGinvestors.io BOUSTEAD SINGAPORE LIMITED (SGX:F9D)

Boustead Singapore - Solid Results Amid Challenging Landscape

  • Boustead Singapore's FY3/20 in-line; core NP (+34% y-o-y) at 100% of our forecast. Strong growth in geospatial and energy segments offsets property segment weakness.
  • We expect both geospatial and energy segments to maintain growth in FY21F on the back of steadfast demand and strong order backlog.
  • Reiterate ADD and SOP-based Target Price of S$1.00.
  • Boustead Singapore's valuation is undemanding at 10.2x FY22F P/E, backed by net cash position and dividend yield of 4.2%.



Boustead Singapore's 2HFY3/20 results in line with expectations



Geospatial technology: strong demand driving business growth

  • Steadfast demand for geospatial technology across Australia and Southeast Asia drove segment revenue/pretax profit to grow 12%/9% y-o-y, respectively, in FY20.
  • Underpinned by government agencies’ increasing use of smart mapping technologies to combat the recent major crises, including Australia’s massive bushfires and global spread of Covid-19 (contact tracing, planning of emergency routes, etc.), we continue to expect a 7.5% pretax profit growth for the segment to S$31.9m in FY21F.


Energy-related engineering: strong earnings visibility till 1HFY22F

  • Despite the downturn in global crude oil prices, pretax profit of the energy-related engineering segment surged 6x y-o-y in FY20, as Boustead executed on its strong order backlog. We see strong earnings visibility till end-1HFY22F, as Boustead Singapore's orderbook remained high at S$279m as of end-FY20 (end-FY19: S$103m), mainly made up of downstream oil & gas businesses (waste heat recovery units for LNG projects).
  • We forecast energy-related engineering segment to record a pretax profit growth of 61% y-o-y to S$12.7m in FY21F.


Property segment: near-term headwinds

  • Boustead Singapore's property segment PBT fell 23% y-o-y in FY20 due to weaker project margins. While orderbook remains healthy, we forecast segment PBT to decline 56% y-o-y in FY21 due to a staggered return to normalcy for construction activities post circuit breaker.
  • With lower profit assumptions from property segment, we lower our FY21-22F EPS by 22-24%.


Reiterate ADD and Target Price of S$1.00






ONG Khang Chuen CFA CGS-CIMB Research | Caleb PANG Huan Zhong CGS-CIMB Research | https://www.cgs-cimb.com 2020-07-14
SGX Stock Analyst Report ADD MAINTAIN ADD 1.000 SAME 1.000



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