Tuesday, May 21, 2013

Review of Boustead (Full Year) FY2013 Results

I previously mentioned (link) that Boustead Ltd will report excellent results for its full year FY2013. EPS for the 9 months of FY2013 at that time of writing was already matching the full 12 months of FY2012. I wasn't wrong. Since then, Boustead shares have gone higher and higher each day to a record high of 1.52.
I was also right in predicting that they will be giving a more generous dividends in view of their spectacular results - Final dividends 3 cents and Special dividends 2 cents, amounting a total of 5 cents/share. The spectacular results were driven mainly due to its Real Estate Solutions Division of design and build projects which has increased a massive 88% year on year. Energy related division is flat while Water & Waste division has dipped 38%. The Group's profits were also boosted by write-backs of previous year overprovision of tax which contributed to a lower effective tax rate.
What is interesting is that in the report, the management has played down the strong performance of the Real Estate Division for FY2014, claiming that it is almost impossible to repeat the results it had in FY2013 due to margin pressure and competition. However, the group expects its Energy related segment to perform better next year.
Boustead is currently sitting on a net cash of 37% of its total. I feel like an M&A activity would be required to boost up its earnings profile. Energy and property segment may look suspect in FY2014 due to uncertainty. At current price, Forward P/E looks to be much higher than Current P/E, making its share price less attractive. It'll be interesting to see how market reacts to the Boustead price tomorrow. If it reacts well (which I think it will), it could possibly give me an opportunity to exit partially.

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