Highlights from Boustead Singapore’s Latest Full Year Results

Boustead Singapore  (SGX: F9D), a technology group focused on geo-spatial solutions and infrastructure-related engineering services, reported its full year results yesterday. It posted annual revenue of S$513.7 million, almost unchanged compared to S$513.2 million a year ago.

With gross profit margins remaining constant at 34%, gross profits were also stable at S$175.4 million. However, profits for the period dwindled 12% year-on-year to S$74.05 million from S$84.48 million.

The company contains four main operating divisions (revenue mix in brackets): Real Estate Solutions (41%); Geo-Spatial Technology (21%); Energy-Related Engineering (35%); and Waste & Wastewater Engineering (3%).

I shall take a closer look at how each division fared.

Energy-related Engineering brought in S$181.3 million in sales for the year, up a whopping 49% from a year ago. The top-line growth also trickled down to the bottom-line where profit before income tax (PBT) soared 81% due to the robust recovery of the division’s downstream oil & gas business and improvement of margins in major projects.

Contributing a meager 3% of the firm’s revenue, the Water & Wastewater Engineering division did not perform up to expectations like the other divisions with revenue falling 35% year-on-year to S$16.3 million. The decrease is attributable to a tough operating environment and the implementation of fewer major projects.

Despite being the largest division in the group, the Real Estate Solutions division saw its top-line drop 17% year-on-year to S$209.2 million. PBT also dropped 36% to S$39.4 million, partly owing to fewer major projects and lower margins.

Lastly, Geo-Spatial Technology brought in S$106.9 million in revenue for the year, a slide of 7% from a year ago. PBT fell as well to S$25.2 million, down 15% on a year-on-year basis. The decline was largely due to two factors: a weakening Australian dollar in relation to the Singapore dollar and considerable pressure on margins.

Financial position and valuation

Despite the overall decrease in earnings, Boustead’s balance sheet ended the year in the pink of health with a net cash position of S$165.9 million (total cash minus total debt), though the net cash position had declined by 12.3% compared to a year ago. To add on to the health of Boustead Singapore’s finances, it had also recently established a S$500 million multicurrency debt issuance programme, from which it can tap into for capital when needed.

As of 31 March 2014 (plus the new orders since), Boustead’s order book backlog stands at S$380 million, a negligible change over the S$378 million in backlog that was recorded for the corresponding period a year ago. The backlog is where future revenue will be recognized, thus a stagnant order book may mean that earnings growth might be stalled.

Mr. Wong Fong Fui, Chairman and Group Chief Executive Officer of Boustead, commented on the year’s results: “We presented an excellent set of financial results for FY2014 which exceeded our expectations. Despite the expectation of another challenging year, the Group will continue to protect the profitability of our core businesses and look for opportunities to enhance and unlock shareholder value.”

Shares of Boustead closed at S$1.875 on Monday, representing a trailing Price-Earnings ratio of 13.5. It has proposed a dividend payout of S$0.05 per share, which incorporates a special dividend of S$0.02. Coupled with the interim dividend of S$0.02, this brings Boustead’s annual payout to S$0.07,  translating into a dividend yield of 3.73% based on Monday’s closing price. Boustead had paid a total dividend of S$0.07 per share in its previous financial year.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.