Boustead

Boustead: 4Q13 earnings declined 15% to $27.7m bringing the group’s full year earnings to a record of $81.4m, an increase of 46% from FY12. The significant increase was boosted by one-off tax refund, write-backs of tax and gains on disposals of from investments which amounted to $14.5m. Excluding the non-recurring profits, earnings for FY13 would have been $66.9m, still an impressive increase of 20.3% from FY12. All four business divisions were profitable, led by strong performances from both the Real Estate Solutions and Geo-Spatial Technology divisions. Real Estate Solutions division brought in $251.8m of revenues, a stellar 88% increase mainly due to progressive recognition of design-and-build projects. Geo-Spatial Technology division had a stable growth of 6%, contributing $114.4m in revenues to the group, from a strong demand for software and services in Australia. Both Energy-Related Engineering and Water & Wastewater Engineering divisions contributed a combined $147.0m in revenues, a decline of 11.5% from FY12. The decline was mainly due to fewer major projects implemented in FY13 in its Water & Wastewater Engineering division. The group’s current order book backlog is healthy at $378m, and has a net cash position of $189m- which the management has indicated that the group will be enlarging its industrial leasehold portfolio, as well as to pursue acquisitions and investments. Going forward, the management has guided that the Real Estate Solutions division will be faced with a challenging industrial real estate market, but will be mitigated by bright spots in the oil & gas market, aiding its Energy-Related Engineering division. Geo-Spatial Technology division will continue to undergo steady growth; and on its Water & Wastewater Engineering division, the group has recently made an initial investment in the renewable energy sector in Japan. A final dividend of 3¢ per share and special dividend of 2¢ per share was proposed, bringing FY13 total dividends to 7¢- implying an annual yield of 5.4% Based on the last closing price of $1.52, Boustead trades at 9.4x historical P/E, and 7.1x ex-cash.