By all accounts, Boustead hasn’t developed into a consistent grower of earnings since I got to know this Singapore stock in 2005.
A part of Boustead’s business deals with the design, build, and delivery of industrial real estate in Singapore and water-related projects. As long as they have these segments of the business, the revenue and earnings will be volatile.
Their real estate leasing and geo-spatial business provides more consistent earnings.
From early 2000 to 2010, Boustead missed the opportunity to throw their industrial property into a REIT when it was popular to do so to unlock the value for their shareholders. Since then, they been struggling to do so but have not bear any result.
The spinning off of Boustead Projects is one and didn’t yield much value unlocking. In 2021, Boustead Project managed to successfully put 14 of their leasehold properties into the Boustead Industrial Fund (BIF) and unlock some money:
This was timely as 2021 was not a good year for the engineering & construction business of Boustead Projects. Cash holdings at Boustead Projects went up from $128 million to $297 million, while borrowings went from $117 million to $2.2 million. Boustead projects still hold 25% of BIP and there should be leverage in BIP but there is not much recourse to Boustead Projects.
Given this unlocking development, out of parent Boustead’s $480 million in case, $297 is trapped in Boustead Projects. The cash can be put to better use if unlocked, and perhaps without other strategic uses, there isn’t much point for Boustead Projects to exist.
This may be why Boustead decided to offer $0.90 for Boustead Projects:
This must have made the shareholders of Boustead Projects deeply unhappy because it is very low compared to
