Boustead    Last:1.64   -

Gem in making

Any feedback on this counter ...recently noticed it came alive and price has been rising.

FA shows positive respond on this counter.

TA comments needed, saw a Doji form today ... should I wait??

 

Hi all, wow its been 3 mths since I last posted on Boustead in early July. and wow, so many REAL and GENUINE fundamental business transactions have happened for this wonderful company.

1. top of the list must be the $300m contract in Libya. if I read the interview in The Edge about 2 or 3 weeks ago, it was mentioned that it is a cost + margin contract, ie. margins are protected. Exact wordings ' cost plus is better because there is no risk, and the margins are guaranteed'

in these times, real value investors know that many companies out there only chase for revenue growth, but margins might be not be there. top line spectacular but maybe not flow to bottom line.

2. record breaking S$71 industrial building deal in Ubi by Boustead Projects. Musicwhiz I believe you are quite a real investor, or else you would not be in this company as well. Take a drive down to Ubi. The piling is already going on. The site is beside Osim.

3. completion of their latest industrial building sale, which will carry a $6m gain into the 1H results ending Sept 07.

4. if one also bothered to read their annual report in detail, you would pick up that on page 89 , point 39 - EVENTS AFTER THE BALANCE SHEET DATE.  Another $6.3m will also be recorded for the sale of a leasehold building in UK.

so if you add pt 3 and 4 together, and then do your estimates for their other operating units. I believe you will have quite a pleasant surprise for the forthcoming 1H results release in early Nov.

good luck, till the next time....

 

 

 

musicwhiz, it's ok to have diff views. I'm just a small time player, cashing out at certain time to realize the "real value". haha, no offense too.

 

 

Hi stocker2007,

No offense but I do not necessarily agree with your view. Value is what the company generates through building its business, revenues and ultimately, earnings. Price is merely a function of the growth and sooner or later, a company with increasing earnings will see price appreciation. Value comes before price; so fund managers should buy based on value in anticipation of price appreciation, rather than looking at the price appreciation then buying. If not, they would end up being the suckers by buying high when the company is not worth that much salt, and then selling low if it reports bad results.

For retail investors, it's fine if you feel like "cashing out" now and then, but my investment philosophy is to be long-term (at least 5 years) in order to enjoy the full benefits of the growth of the company. In such cases, I would not bother about the daily price. The purpose of a listed company, by the way, is to allow easy access to financing should the company require funds.

This is also my personal view, thanks for yours !

 

Well, I'm happy too about the business progress. However, constant price appreciation will make the company more attractive to fund managers and also reward small investors like us ( allow us to cash out partially or full ). That's the purpose of listed company on the stock exchange right?


 Just my personal view.

 

Actually, I am very happy with the progress that the company is making. Why care so much about the share PRICE unless you want to sell ?

Focus instead on the earnings and value which the company will bring many years down the road......

 

Sianzzz, market cheong like hell, but boustead stagnant. Mr wong should split the stock into1:5 . 

 

Excerpts from 23 aug phillip research report :

Reiterate our BUY recommendation with fair value S$2.89 

Our fair value is S$2.89 which translates to a FY08 P/E of 13.3x and FY08 P/B of
4.2x. We maintain our BUY recommendation and in view of Boustead?s strong order
book (more than S$600 million) and substantial cash holding in its balance sheet, we
would suggest investors to accumulate on this counter especially during price
weakness due to the recent volatile market condition

Expecting more projects?

We believe so. Boustead has already established a
reputable presence in Libya through its several major water and wastewater
engineering projects. With the latest participation in building a new township in the
country, we believe Boustead, through its excellent infrastructure engineering
capabilities (in energy, water, and real estate), will be involved further in the
development of infrastructure for Libya. As commented by Boustead?s CEO Mr Wong
Fong Fui, the new township is part of Libyan government?s long-term national plans
to construct 400,000 houses in the country over the next decade. Once the township
in Al Marj is built successfully, we expect Boustead?s good reputation to be further
established, giving it substantial credentials to participate in similar projects in the
future. The joint venture with the largest government construction company in Libya,
the GCBC, also helps in fostering a successful partnership which we see as an initial
launching platform for further projects in the country.
Possible scenarios ? Boustead to benefit from Libyan growing oil and gas
industries.1 We decide to take a step further and plot out possible scenarios which
we believe may serve as further growth catalysts for Boustead in Libya. According to
a report2 by the Energy Information Administration (?EIA?), Libya holds the largest
proven oil reserves in Africa (see Exhibit 1). Further, as a result of former sanctions
by the United Nations and the United States (which were lifted in 2003 and 2004
respectively) and the stringent fiscal terms imposed by Libya on foreign oil
companies, Libya remains an under-explored country with only around 25% of its
land mass covered by exploration agreements with oil companies. This inevitably led
to a period of under investment in terms of upstream oil exploration and production
as well as downstream refining.


 

 

Singapore, 22 August 2007 ? Mainboard-listed Boustead Singapore Limited
(?Boustead?), a progressive global engineering services and geo-spatial technology
group today announced that it has been awarded a record S$300 million contract to
design and build a new township in Libya, together with joint venture partner, General
Construction & Building Company (?GCBC?), the largest government construction
company in the country. According to the terms of the joint venture, Boustead will hold
a 65% interest in the contract

 

Yet another piece of good news from Boustead. If contracts keep on coming in at this rate, FY08 and FY09 ( surely ) will be another good profitable year for boustead. Good resilent stock to hold, especially during this period of  turbulence condition.


- More projects to be annouced soon ( chairman commented that more contracts in energy sector to be ann. Read musicwhiz's AGM coverage )
- Energy Div secured $26mil project from oil & gas industries
- Clinched 6 high end industrial development projects from year 2007 til now
 

__________________________________________________________________


Boustead Singapore Limited (?Boustead? or the ?Company?) is pleased to announce that
its Energy-Related Engineering Division has secured three contracts totalling S$26
million from the oil & gas industries. More than 50% of the value of these contracts is
expected to be completed within the current financial year ending 31 March 2008.

 

You're welcome Kilroy and it's a pleasure to be able to provide another view other than what the analysts are writing about. Their point of view is a little too "mechanical" for me as they probably just use a growth factor to compute growth for each company/sector with little regards to the unique aspects of each business. You can't blame them cos they have like 10-30 companies to analyze and so this cuts down their analysis time a lot; but it also means they don't "specialize" in any one company well enough to give a detailed opinion on it. However, I have seen some detailed analyst reports for Ezra (another one of my investments) which shows that a lot of thought and research has been put in. If only they did the same for Boustead !

I think that for myself, I may not actually be running a business but in the course of my work I have come across businesses and helped to evaluate not just the financial aspects, but also the operational, marketing and human resource aspects. Thus, this experience, combined with my theoretical knowledge, allows me to comment on business conditions in general for a given company. Of course, I am still always learning and do also read others' blogs for information which may enhance my knowledge. Occasionally, I still encounter things which stump me like the net profit fall for Ferrochina when I thought that its earnings would grow steadily. Sometimes, in business, all is not as it seems and a lot of delays or hiccups can cause costs to escalate out of control. Thus, as rational investors, we must be ready for such bumps and not expect too much from a business (some people expect 80-100% growth year on year for 5 years which is clearly impossible !).

Ok I end off here in case I start to ramble too much.....good night !

 

musicwhiz5,

Thanks for your reply.  Good to know your education background and your interesting hobby.  I enjoyed reading your minutes taken from the recent AGM and also your valuable insight of this company.  A second opinion matters to me most of the time when I am interested in vesting in a company but was hoping that your background would be someone having an experienced with the operations of a geo tech co. In any case I must say its does me to certain extend reading what you have wrote since I am new to the company's business.

 

Hi KilRoy,

Actually, the announcements are publicly available and can be found on SGX Announcements page (there is a link to it from my blog). Also, the company's website www.boustead.sg is very well updated with both press releases, news articles and even analyst reports; so do pay it a visit as well.

I majored in Accounting as my bachelor's degree and subsequently got my CPA and also did a Master's In Business Administration. My hobby is analyzing and evaluating companies and I enjoy what I do now.

Cheers !

 

musicwhiz5,

I have been quite impressed by Boustead's stock performance for the last three months but am not vested yet. Looking forward to your assistance in posting Boustead's annoucement since I am not a SI forumer to subscribe to the email alert.  What did you major in for your tertiary edu if may I ask?

 

Hi Stocker2007,

Thanks for the compliment, I try my best to be very focused about the companies I invest in, according to the focused investing strategy which Warren Buffett advocates.

Do check back often for updates on Boustead; I will usually do a posting should they announce any important contracts or corporate moves.

Regards.....

 

musicwhiz, read yr blog on boustead and i shld say this is really better coverage than the analyst. you sure u not from boustead PR dept?


 


 

 

This is one stock i never really regret holding for long term, giving excellent stable return and less volatity even in this "huge correction wave".
The only lackluste is they need to beef up their PR. Do more M&A and make alot of noise /hoohah about whatever they acquired or doing.



Anyone attended the AGM and asked the company whether they have any acquistion in mind? They seems to have quite alot of cash in hand i think.

 

It's not illiquid today, about 274,000 shares changed hands already. Very strong fundamentals and balance sheet propping this up against the red tide. It's quite amazing really, I am very surprised myself.

 

Dun knoe whether to hate this or love this, while the rest of the market dropped like hell, this remains steady, pom pee pee. illiquidity is a blessing in this kind of situation.

Updates :

- Secured $74m contract to build a high tech industrial building at Ubi. Number 5 since feb. Positive outlook for FY08 & FY09


- Chairman revealed more projects in energy sector to be annouced

- Dividend of 4.5cts, ex date on 2 aug     

 

 

 

Liquidity is the enemy of this counter. When the market is bullish, price can be easily pushed up, likewise, when sentiment change, the price can drop quite drastically as well.