Boustead Project - CGS-CIMB Research 2022-11-21: Strong Orderbook Underpins Growth

Boustead Project - Strong Orderbook Underpins Growth

  • Boustead Project (SGX:AVM)’s 1HFY23 (Apr to Sep 2022) core net profit of S$7.7m (+30% y-o-y) was above expectations at 65% of our full-year forecast.
  • With a major contract win of ~S$300m, Boustead Project’s order backlog grew to S$452m as at end-Sep. With this, coupled with the progressive clearing of projects secured pre-pandemic, we expect Boustead Project's engineering & construction margins to improve in 2HFY23F and return to a healthier level of mid-single-digit PBT margin by FY24F.
  • Boustead Project has a strong net cash of S$155m (end-FY22) to fund acquisitions.
    • In Singapore, Boustead Project's 50%-owned JV has completed the acquisition of a S$515m Bideford Road mixed-development comprising targeted hospitality, healthcare and commercial components. The building is currently undergoing alteration and additions (A&A) and we expect it to start contributing in FY24F.
    • In Vietnam, Boustead Project is also currently in final phases of completing the acquisition of a 60% stake in an industrial real estate fund (to be jointly set up with a local JV, with Boustead Project injecting six assets worth US$84m and cash payment of US$28m). The fund plans to grow through a combination of M&As and greenfield developments, and Boustead Project could benefit from growth of the income-yielding portfolio as a developer-owner.
  • We expect a stronger showing for Boustead Project in 2HFY23F and further recovery in FY24F, with progressive margin recovery for its engineering & construction segment and higher rental income as new investments start to contribute. Boustead Project also owns a portfolio of industrial properties worth S$577m (mostly JV arrangements where it holds ~50% stakes) that could be injected into Boustead Industrial Fund (BIF) to further unlock their value.
  • Reiterate ADD rating on Boustead Project. We raise our FY23-25F EPS forecast for Boustead Project to reflect the higher order backlog, lifting our target price for Boustead Project to S$1.35 (still based on 25% discount to our FY23F RNAV estimate).

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

ONG Khang Chuen CFA CGS-CIMB Research | 2022-11-21

Previous report by CGS-CIMB:
2022-06-08 Boustead Projects - Charting Next Leg Of Growth.

Price targets by other brokers at Boustead Project Target Prices.
Listing of research reports at Boustead Project Analyst Reports.

Relevant links:
Boustead Project Share Price History,
Boustead Project Announcements,
Boustead Project Dividends & Corporate Actions,
Boustead Project News Articles

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