Despite being around for nearly 190 years, Boustead Singapore Limited (SGX: F9D) does not seem to be a well-known company amongst retail investors.
But given its long history, I thought it could be interesting to have a closer look at the company’s business. Here are some key things to note:
1. The different business divisions
Boustead Singapore’s latest annual report gives a detailed picture of the revenue performance of its various business divisions.
Source: Boustead Singapore Annual Report
In FY2016 (fiscal year ended 31 March 2016), Boustead Singapore saw its revenue decline 12.5% year-on-year to S$486.7 million while its net profit fell 38% year-on-year to S$41.1 million.
2. Hit by global energy downturn
The chart above shows that the contribution from the Energy-Related Engineering division to Boustead Singapore’s total revenue in FY2016 had fallen sharply.
Turns out, the division is the leading factor behind Boustead Singapore’s revenue decline. This division provides wastewater processing services (only a small part of the business) and supplies heaters for downstream oil & gas processing plants.
It’s no secret by now that the oil & gas industry has been caught in a rough situation these past two years or so given the collapse in oil prices. In FY2016, the Energy-Related Engineering division’s revenue and profit slumped by 33% and 73%, respectively.
Boustead Singapore reported that its oil & gas clients, with the exception of those based in North America, are spending mainly on maintenance and replacement capital expenditure only.
3. Builder and landlord
The Real Estate Solutions division – which essentially comprises Boustead Singapore’s majority-ownership of Boustead Projects Ltd (SGX: AVM) – did relatively better, with flat revenue and an 11% decline in profit.
The division specializes in developing environmentally friendly industrial buildings. Recently, Boustead Projects won an S$88.9 million contract from JTC Corporation to develop a business park at the Mediapolis in One-North.
Boustead Projects also has exposure to Malaysia’s Iskandar economic zone, which is located right next to Singapore, and has some building projects in Vietnam and China.
The Real Estate Solutions division is not just a developer. It is also a landlord that owns industrial and commercial spaces. As of 31 March 2016, Boustead Projects’ portfolio contains 16 completed industrial leasehold properties that are located mainly in Singapore. The company also has a 5.5% stake in the commercial and retail development, TripleOne Somerset.
4. Mapping technologies
The remaining division is Geo-Spatial Technologies. In FY2016, the division saw a 7% decline in revenue that resulted in a 12% slide in profit.
The Geo-Spatial Technologies division is an exclusive distributor of Esri geo-spatial technology – a leading geographic information systems in the world – in Australia and certain parts of Southeast Asia.
Boustead Singapore also happens to be one of the top three global distributors of Esri’s mapping systems and solutions, which can be used to provide crucial details for the planning of agriculture, real estate, and infrastructure projects. The technology can also help form digital infrastructure that is essential for creating smart nations and smart cities.
Some of the clients of the Geo-Spatial Technologies division include Australia’s Department of Environment, Land, Water & Planning in Victoria and Singapore’s Land Transport Authority.
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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 Ong Kai Kiat owns shares in Boustead Singapore.