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My Personal Analysis of Boustead

Boustead_NewEnergy

In 2008 and 2009, Boustead was recognised in the prestigious Forbes Asia 200 Best Under A Billion as one of the Asia Pacific’s 200 best public-listed corporations under US$1 billion in revenue.  Boustead is also listed on the MSCI Global Small Cap Index for Singapore and the FTSE ST Small Cap Index.

Market Capitalization

As of FY15, the market capitalisation for Boustead Singapore Limited stands at S$911.7m.

Boustead is a small cap stock.

Boustead Dividend-History

Dividends

I like the way Boustead clearly indicates the dividend history on their website. From the table, you can see that Boustead pays out consistent dividends. Earnings per share increase from 2006 to 2009, followed by a slight drop in 2010 before picking up again from 2011 to 2015. If we look at the dividend payout ratio, it is rather inconsistent. The dividend payout ratio is rather inconsistent. The lowest dividend payout ratio is 31.25% in 2013. The highest dividend payout ratio is 58.8% in year 2006.

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total dividend (cents) (Exclude Special Dividends) 2.94 3.25 5 4 4 4 5 5 5 4
Earnings per share (cents) 5 7 10  12  8  10  11  16  14  12
Dividend payout ratio (%) 58.8 46.43 50  33.33  50 40 45 31.25 35.71 33.33

Debt

Debt servicing ratio is increasing steadily over the years. There is a significant increase in debt servicing ratio from year 2014 to 2015.

Year 2011 2012 2013 2014 2015
Net interest expense (SGD dollar in thousands) 613 845 1,170 832 2,190
Operating Income (SGD dollar in thousands) 69,888 55,714 94,954 87,317 81,822
Debt service ratio (%) 0.87 1.52 1.23 0.95 2.68

* Figures from Morning Star

Investment Moats

Reputable brand and proven track record

With a strong brand heritage, we have established reputable positions in our principal market sectors, bringing together engineering skills and proven technology in over 1,000 projects.

Government Contracts

NOV 2014/Australia
Esri Australia awarded A$16.5 million landmark contract by Defence – largest in history

DEC 2014/Australia
Esri Australia provided GIS platform for Open Data Institute of Queensland to develop open data portal – Australia’s first

JAN 2015/Malaysia
Esri Malaysia partnered JUPEM’s BGSP and MAF to develop uGEO for Defence Programme.

Excellent Management

The below is extracted from the Chairman’s message for FY15 Annual Report. What do you think or feel after reading this?

Call me a cautious guy.  Should anything untoward happen to me (touch wood), about half of our Group’s business will go on operating without a hitch as if nothing had happened.

Investment Strategy

With the spin off of Boustead Projects, Boustead Singapore has to focus on Energy Related Engineering and Geo-Spatial Technology Services.

Boustead Energy Related Engineering will continue to be impacted by the plunging of crude prices as corporations cut on capital expenditures.

There doesn’t seem to be any catalyst for Boustead Projects in the near future. I shall hold on to the stock without action for the near term as the stock continues to pay consistent yearly dividends.

Having said that, Boustead fell to a low of 1.125 today. Will monitor Boustead and top up if prices drop further as track records have proven Boustead ability to thrive in tough market conditions.

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