Boustead Projects Ltd’s First Quarter Earnings: What Investors Should Know
Boustead Projects Ltd (SGX: AVM) is an industrial real estate solutions provider in Singapore, with core engineering expertise in design-and-build and development of industrial facilities for both multinational corporations and local companies.
On Friday, Boustead Projects announced its first quarter earnings for the financial year ending 31 March 2019 (FY2019). The reporting period is from 1 April 2018 to 30 June 2018.
Revenue for the quarter grew 6.8% year-on-year to S$48.75 million. The increase was due to higher design-and-build revenue, which more than offset lower leasing revenue.
Design-and-build revenue grew 9% year-on-year to S$41.2 million in the reporting quarter due to revenue recognition from the order book backlog seen at the end of FY2018. Leasing revenue fell by 5% year-on-year to S$7.5 million, primarily due to the lease expiry of the 85 Tuas South Avenue 1 property in January 2018. The lack of rental income from the property was partially offset by development management fees received from the Boustead Development Partnership.
Net profit attributable to shareholders (including one-off gains) rose 73.3% from S$5.79 million a year ago to S$10.04 million. Consequently, diluted earnings per share (EPS) for the reporting quarter was up 77.8% from 1.8 cents a year ago to 3.2 cents.
Without the one-off gain, Boustead Projects’ net profit attributable to shareholders would have declined by 11% year-on-year to S$5.15 million. Diluted EPS would thus be around 1.65 cents.
Operating cash flow for the reporting quarter ballooned by almost 700% from S$1.60 million a year ago to S$12.78 million. With capital expenditure (including additions to investment properties) rising from S$110,000 to S$823,000, Boustead Projects’ free cash flow surged from S$1.49 million to S$11.96 million.
Boustead Projects’ balance sheet strengthened in the latest quarter. As of 30 June 2018, the company had S$129.03 million in cash and cash equivalents and S$69.23 million in total debt. This translates to a net cash position of S$59.80 million. At the end of March 2018, Boustead Projects’ had a net cash position of $40.88 million.
The company’s net asset value (or book value) per share increased by 16.6% from S$0.736 a year ago to S$0.858.
Boustead Projects updated the market that the “pre-committed take-up of space at ALICE @ Mediapolis in Singapore, and the first phase construction and marketing of the Boustead Industrial Park in Vietnam are both progressing well”.
Boustead Projects has also secured a new tenant on a long-term lease for 85 Tuas South Avenue 1 during the first quarter. Rental cash flow from the property is expected to start in FY2020 after addition and alteration works are completed.
Thomas Chu, Boustead Projects’ managing director, said:
“With a slightly better outlook for FY2019, we remain positive that our market leadership, financially-sound position and strong business development efforts will allow us to capitalise on a steady pipeline of opportunities both in Singapore and overseas. We continue to invest in smart and eco-sustainable building capabilities, drive cost and productivity improvements, and intensify our efforts in securing strategic partnerships and acquisition targets that can support our market expansion and extend our capabilities.”
Boustead Projects’ current order book backlog (unrecognised project revenue remaining at the end of the first quarter plus the total value of new orders secured since then) is at S$202 million. For context, the figure stood at S$137 million a year ago.
The Foolish takeaway
Overall, it was a healthy performance from Boustead Projects, even though its adjusted net profit fell. The company also has a “slightly better outlook” for the year with a stronger order book. Boustead Projects shares ended Friday at S$0.895 each. This translates to a price-to-book ratio of 1.04 and a trailing dividend yield of 1.7%.