According to Lim, Boustead's stronger FY2025 was driven by margin expansion on effective cost management and an exceptional gain of $29 million from the transfer of Boustead’s fund and property management businesses to Unified Industrial.
More interesting for investors, Boustead is mulling if it should inject some of its logistics and industrial real estate assets into a REIT.
In addition, Boustead’s FY2025 dividend yield is also fairly attractive at 5.5% based on its last close price as at June 24.
Lim figures that Boustead is also benefitting from investors starting to position themselves in various small and mid-caps ahead of the $5 billion boost from MAS expected by end of the year.
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"We look favourably upon Boustead’s growth profile in the long term as its diversified businesses provide exposure to multiple secular trends," says Lim.
For example, as climate action continues to gain traction, Boustead’s Energy Engineering division is able to support energy majors through its energy-efficient offerings.
Demand for its Real Estate division’s expertise in constructing highly efficient, eco-sustainable, and specialized industrial buildings continues to grow.
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As the value of the Internet of Things (IoT), which is the underlying technology behind smart cities, continues to accelerate, Boustead’s Geospatial division is likely to see continued demand.
"That being said, we do acknowledge uncertainties in the company’s near-term outlook," warns Lim, referring to external developments including geopolitical tensions and disruptions to global manufacturing supply chains.
Even so, Boustead’s engineering order backlog is "a lot healthier" at $349 million as at March 31, up from $247 million recorded as at March 31 2024.
"Boustead is a quality business, in our view, and we think there is a possibility of re-rating in the near term, catalysed by ongoing efforts to revitalise the Singapore equity market and or any positive value-unlocking developments coming out of the ongoing strategic review," says Lim.
She has kept her earnings estimates but has narrowed her conglomerate discount when valuing this company from 15% to just 5%, leading to the higher fair value of $1.63.
Boustead Singapore traded at $1.40 as at 10.18 am.
