Boustead Singapore Limited’s Latest Earnings: Things Are Not Looking Good

Boustead Singapore Limited (SGX: F9D) provides infrastructure-related engineering services and geo-spatial technology to multinational corporations, among others.

Yesterday, the firm announced its first-quarter of 2018 (1Q 2018) earnings. The financial period was from 1 April 2017 to 30 June 2017.

Here’s a quick look at the financial figures from the latest quarter:

1. Revenue fell 21% year-on-year to S$90.3 million. All its business divisions – Energy-Related Engineering, Real Estate Solutions and Geo-Spatial Technology – performed poorly for the quarter.

2. Net profit plunged 58% to S$2.9 million.

3. Consequently, earnings per share for the quarter more than halved, from 1.3 Singapore cents in 1Q 2017 to 0.6 Singapore cent in 1Q 2018.

4. The net cash position improved to S$212.2 million, at the end of the reporting quarter. As at 31 March 2017, the net cash position was at S$188.1 million.

5. Cash flow from operations was at S$6.7 million, and S$411,000 was spent on capital expenditure. Therefore, the firm brought in S$6.3 million in free cash flow for the latest quarter, a decline from S$11.1 million raked in a year ago.

Softer demand from the oil and gas sector has continued to impact revenue at the Energy-Related Engineering division. The firm noted that “final investment decisions on major oil & gas capital expenditures, especially for greenfield developments continued to be deferred”.

For latest earnings coverage on the Real Estate Solutions division, Boustead Projects Ltd (SGX: AVM), head here. Boustead Projects is 51%-owned by Boustead Singapore.

Revenue at the Geo-Spatial Technology division was 3% lower year-on-year at S$25.7 million. However, Boustead Singapore added that “demand for the division’s products and solutions remained firm across Australia and parts of South East Asia”.

Profitability wise, the Energy-Related Engineering division saw its first quarterly loss before income tax since the global oil and gas recession hit three years ago. In the latest quarter, it saw losses of S$2.4 million while a year ago, profit before tax was S$1.8 million.

Boustead Singapore’s current order book backlog stands at approximately S$209 million (unrecognised project revenue remaining at the end of 1Q 2018 plus the total value of new orders secured since then). Out of the S$209 million, S$72 million belongs to the Energy-Related Engineering division and S$137 million is under the Real Estate Solutions division.

The firm provided the following outlook:

“The current macro economic environment continues to be highly challenging and competitive, with a great amount of uncertainty contributed by global political events. In light of this, the Group will continue to apply prudent cost management measures.

While the Group believes it will continue to be profitable in FY2018, the normalised levels of profit will not be comparable to that of FY2017.”

Shares of Boustead Singapore closed at S$0.945 on Thursday. This gives a trailing price-to-earnings ratio of around 17 and a dividend yield of 2.2%.

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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 Sudhan P owns shares in Boustead Singapore Limited and Boustead Projects Ltd.