(See also: Boustead Singapore reports 18% rise in FY17 earnings to $33.3 mil)
In a Tuesday report, analysts Roy Chen and William Tng say they remain cautious on the Singapore industrial property sector outlook, and have hence factored in a 26% y-o-y decline in Boustead Projects’ (BP) FY18F core net profit estimates, given that its design and build order book currently stands at a five-year low of $146 million.
Nevertheless, they note that the energy-related engineering segment’s positive pre-tax profit of $1.4 million was a “happy surprise”, as the analysts previously wrote off profit expectations for the division for their FY17-19F estimates.
“In order to navigate the challenging landscape, management has adopted stringent cost controls, including right-sizing its workforce to less than half of its peak level. We believe the risk of the energy division running into big losses is limited, given the business’s negligible capex needs and scalable overhead expenses,” they add.
As for the group’s geospatial technology division, Chen and Tng continue to look at a mid-to-high single-digit pre-tax profit growth over FY18-19F, which they believe will be driven by a growing demand from Singapore’s national defence and smart city/nation initiatives across the region.
“For conservative purposes, we have fully written off the valuation for the energy division. Given the strong pure cash position of $163 million at [group] level as at end-FY17, management is prudently looking for potential M&A opportunities,” say the analysts.
As at 3.54pm, shares of Boustead are trading 1 cent lower at 87 cents.
