BOUSTEAD PROJECTS LIMITED (SGX:AVM)
Boustead Projects - Charting The Next Leg Of Growth
- With the completion of its asset sale to Boustead Industrial Fund (BIF), Boustead Project reported a net profit of S$131.7m for FY21. Special dividend brings Boustead Project's FY21 total dividend to S$0.154.
- Core business remains impacted by COVID-19, but with successful capital recycling, Boustead Project now has a strong war chest to chart its next leg of growth.
- Boustead Project is attractively valued, with net cash of S$0.95 per share (86% of market cap), while holding stakes in properties worth S$700m. Reiterate ADD, S$1.40 target price.
Boustead Project's FY21 results largely supported by disposal gains
- Boustead Project (SGX:AVM) reported a FY21 (Apr 2020 to Mar 2021) net profit of S$131.7m, below expectations at 95% of our FY21F forecast. Excluding a disposal gain of S$134.8m, post-completion of its sale of 14 properties to Boustead Industrial Fund (BIF) in Mar 21, Boustead Project recorded a FY21F core net loss of S$3.2m, as its design-and-build segment was heavily impacted by the COVID-19 pandemic.
- In consideration of the successful value unlocking and capital recycling, Boustead Project proposed a special dividend of S$0.145 per share. Total FY21 dividend of S$0.154 represents a yield of 13.9%.
COVID-19 still a drag on core business
- While activities in the construction industry have generally returned to ~75%-80% of pre-COVID-19 levels in 1QCY21, we expect Boustead Project to remain impacted by the unprecedented cost increases relating to the pandemic, and forecast a lower margin on existing projects. Our FY22-23F earnings per share forecast for Boustead Project is hence lowered by 36%-55%.
- Nevertheless, we are pleased to note that Boustead Project managed to secure contract wins of S$178m in FY21 (FY20: S$93m) despite the COVID-19 disruptions, and its current orderbook of S$351m should support healthy operating levels for FY22F.
Strong balance sheet to chart the next leg of growth
- With the capital recycling, Boustead Project has a strong net cash position of S$296m as of end-FY21F. Together with its network of strategic platforms and partnerships, we believe Boustead Project will be able to accelerate its international expansion plans as its next leg of growth. A target market could be Vietnam, where Boustead Project recently signed agreements to acquire a 49% stake of 16 ready-built factories in Bac Ninh Province.
- We expect more M&As to come.
Reiterate ADD on Boustead Project with a higher target price of S$1.40
- Despite the share price rally year-to-date, Boustead Project remains attractively valued, with net cash of S$0.95 per share as of end-FY21 (86% of market cap), while owning a portfolio of industrial properties worth ~S$700m (mostly on JV arrangements where Boustead Project holds ~50% stakes) that can be potentially injected into BIF or other property trusts to further unlock value in future years.
- We lift our target price for Boustead Project to S$1.40, now based on a 25% discount (previously 30%) to our FY22F RNAV estimate of S$1.86 per share (post-special dividend payout).
- See
- Re-rating catalysts include stronger order wins or further asset injection into Boustead Industrial Fund (BIF).
- Downside risks include further construction delays.
ONG Khang Chuen CFA
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-05-26
SGX Stock
Analyst Report
1.40
UP
1.330
