Boustead Singapore Limited Financial Analysis: Net Profit Growth of 34%

Business Description

Boustead Singapore Limited (SGX:F9D), established in 1828, is a global Infrastructure-Related Engineering and Technology Group listed on the SGX Mainboard. The company’s core business operations include:

• Energy Engineering Division: Focuses on energy infrastructure, including the design and supply of process heater systems and waste heat recovery units.
• Real Estate Solutions Division: Specializes in smart, eco-sustainable business park and industrial developments.
• Geospatial Division: Provides professional services and distributes Esri ArcGIS technology, enabling smart nations and cities.
• Healthcare Division: Offers innovative medical solutions addressing age-related chronic diseases and rehabilitative care.

Boustead operates globally with a presence in Asia, Australia, Europe, Africa, and the Americas, and has installed projects in 93 countries and territories.

Industry Position

Boustead Singapore Limited holds a significant position within its industry, catering to niche markets in energy infrastructure, smart real estate solutions, geospatial technology, and healthcare. The company competes with other engineering and technology firms globally but leverages its long-standing reputation and diverse service offerings to maintain a competitive edge.

Revenue Streams and Customer Base

The company generates revenue from multiple streams:

• Energy Engineering: Primarily from engineering contracts and sales of products.
• Real Estate Solutions: Engineering and construction contracts, management fees.
• Geospatial: Software licenses, maintenance, and professional services.
• Healthcare: Project revenue, product sales, and services.

Boustead’s customer base is diverse, spanning various industries and regions, which helps mitigate risk from economic downturns in any single market.

Financial Statement Analysis

Income Statement

For the six months ended 30 September 2024, Boustead reported:

• Revenue: \$295.2 million, down 20% year-on-year.
• Gross Profit: \$116.6 million, up 11% year-on-year.
• Total Profit: \$38.7 million, up 27% year-on-year.
• Net Profit: \$36.0 million, up 34% year-on-year.

The increase in net profit was despite lower revenue, driven by higher gross margins and interest income.

Balance Sheet

As of 30 September 2024, Boustead’s financial position remained strong with:

• Total Assets: \$1,067.3 million.
• Total Liabilities: \$506.1 million.
• Net Assets: \$561.2 million.
• Net Asset Value per Share: 108.8 cents.

The company maintained a healthy balance sheet with significant cash reserves and manageable debt levels.

Cash Flow Statement

For the six months ended 30 September 2024, Boustead reported:

• Net Cash Inflow from Operating Activities: \$25.2 million.
• Net Cash Inflow from Investing Activities: \$0.5 million.
• Net Cash Outflow for Financing Activities: \$31.2 million.

Overall, cash and cash equivalents decreased by \$3.8 million to \$366.6 million. The company continued to generate positive operating cash flow, supporting its dividend payments and investments.

Dividends

The Board of Directors declared an interim dividend of 1.5 cents per share, maintaining the same level as the previous year’s corresponding period. The dividend is tax-exempt (one-tier) and payable on 2 December 2024.

Key Findings

Strengths

• Strong Net Profit Growth: 34% increase in net profit year-on-year.
• Diverse Revenue Streams: Multiple business divisions mitigating risk.
• Healthy Balance Sheet: Significant net assets and cash reserves.
• Consistent Dividend Payments: Interim dividend of 1.5 cents per share.

Risks

• Revenue Decline: 20% decrease in revenue year-on-year.
• Currency Exchange Losses: Other losses due to unfavorable currency movements.
• Market Uncertainties: Geopolitical tensions and global economic challenges.

Date of Report and Financial Year

This report was dated 12 November 2024 and covers the financial performance for the six months ended 30 September 2024.

Special Activities

Boustead is focusing on pursuing opportunities with a risk-managed approach, leveraging its healthy balance sheet and net cash position to navigate current market headwinds.

Investor Recommendations

If Currently Holding the Stock:

Investors should consider holding the stock due to the company’s strong net profit growth and consistent dividend payments, coupled with a healthy balance sheet and diverse revenue streams.

If Not Currently Holding the Stock:

Investors may consider purchasing the stock, given the company’s demonstrated profitability, healthy financial position, and attractive dividend yield, despite the current revenue decline.

Disclaimer

This analysis is based on the financial report provided and is not a guarantee of future performance. Investors should conduct their own due diligence and consider their financial situation and investment objectives before making any investment decisions.