Boustead Singapore Limited: Net Profit Growth of 34% in 1H FY2025

Business Description

Boustead Singapore Limited (SGX:F9D) is a global infrastructure-related engineering and technology group. The company’s core business operations are divided into several segments:

• Energy Engineering Division: Focuses on energy infrastructure projects.
• Real Estate Solutions Division (Boustead Projects): Engages in smart, eco-sustainable, and future-ready real estate developments.
• Geospatial Division: Provides professional services and distributes Esri ArcGIS technology, a leading geographic information system in the Asia Pacific.
• Healthcare Division: Offers innovative medical solutions for chronic diseases and mobility issues, focusing on rehabilitative care and sports science.

Boustead has a vast global network across Asia, Australia, Europe, Africa, and the Americas, with an installed project base in 93 countries and territories globally.

Industry Position and Market Share

Boustead Singapore Limited operates in the competitive sectors of energy, real estate, geospatial technology, and healthcare. The company’s market share is bolstered by its strong reputation, historical significance, and a diverse portfolio of engineering and technology services. Competitors include other major infrastructure and technology firms in these sectors.

Revenue Streams and Customer Base

Boustead’s revenue streams are diversified across its business divisions:

• Energy Engineering Division: Revenue decreased by 15% year-on-year to S\$74.8 million.
• Real Estate Solutions Division: Revenue decreased by 38% year-on-year to S\$105.0 million.
• Geospatial Division: Revenue increased by 4% year-on-year to S\$108.4 million.
• Healthcare Division: Revenue increased by 47% year-on-year to S\$6.9 million.

The company serves a broad range of customers in various sectors, leveraging its diverse supply chain and strong geographic footprint.

Financial Statement Analysis

Income Statement

Key financial highlights for 1H FY2025 ended 30 Sep 2024 include:

• Revenue: S\$295.2 million, a 20% decrease from 1H FY2024.
• Gross Profit: S\$116.6 million, an 11% increase from 1H FY2024.
• Profit Before Income Tax (PBT): S\$52.8 million, a 20% increase from 1H FY2024.
• Total Profit After Income Tax: S\$38.7 million, a 27% increase from 1H FY2024.
• Net Profit: S\$36.0 million, a 34% increase from 1H FY2024.

Balance Sheet

As of the end of 1H FY2025:

• Net Asset Value Per Share: 108.8 cents, up from 97.6 cents at the end of FY2024.
• Net Liquid Position: S\$274.1 million, translating to 55.7 cents per share.

Cash Flow Statement

The report does not provide specific details on the cash flow statement, but highlights a healthy net cash position and steady profitability from core businesses.

Dividend Information

The Board of Directors has declared an interim dividend of 1.5 cents per share, matching the previous year’s corresponding period.

Key Findings and Recommendations

Strengths

• Strong net profit growth of 34% year-on-year.
• Healthy balance sheet with increased net asset value per share.
• Diversified revenue streams across multiple business divisions.
• Declared interim dividend, indicating stable returns to shareholders.

Risks

• 20% decrease in overall revenue due to lower contributions from key divisions.
• Challenging global business environment with geopolitical tensions and macroeconomic uncertainties.
• Decreased order backlog in Energy Engineering and Real Estate Solutions Divisions.

Strategic Actions

The company is focusing on risk-managed opportunities to bolster new contracts and improve the current lower backlog, particularly for the Energy Engineering and Real Estate Solutions Divisions. The Geospatial Division continues to experience stable demand.

Investor Recommendations

For Current Investors:

Hold – Given the company’s strong net profit growth, healthy balance sheet, and declared dividend, it is advisable to hold onto the stock.

For Potential Investors:

Buy – The company’s commendable performance, diversified revenue streams, and strategic focus on risk management present a compelling case for investment.

Date of Report

The report is dated 12 November 2024 and covers the financial performance for 1H FY2025 ended 30 September 2024.

Disclaimer

This analysis is based on the financial report provided and should not be considered as financial advice. Investors are encouraged to conduct their own research or consult with a financial advisor before making any investment decisions.