Wednesday, February 13, 2013

Review of Boustead results Q3 FY2013

For Q3 FY2013, the Group achieved revenue of $141.5 million and net profit of $26.2 million, an impressive YoY increase of 49% and 373% respectively. Out of the $26.2 million from the net profit, $5.8 million comes from the one-time gain on the disposal of available for sale investment and $3.4 million from tax refund.
All 4 business segments registered good growth in revenue (slight decrease in the water & waste engineering segment) YoY, with the "Real Estate Solutions" segment doubling its revenue to $77 million, an increase of 121% YoY due to completion of order book backlog revenue recognition from FY2012.
As of 31 December 2012, the Group financial position remains healthy, with Cash & Cash Equivalent of $178.7 million after netting off all the borrowings. The Group's NAV is up from 50.4 cents to 53.8 cents, out of which 35.6 cents is net cash.
Given its strong cash position and huge order backlog within the Group, I expect the company to raise its dividends payout up from 5 cents to 7 cents (including interim and final) for the upcoming FY2014. A 7 cents payout would means $35 million cash outflow from the company's financing activities and is something that the company can afford to do so to reward their shareholders. It would translate nicely into 5.7% yield given the latest closing price of $1.23.
With the company's strong order backlog, cash cow net balance sheet and a group of good management led by Mr. Wong, Boustead looks like a strong performer in the year 2013.

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