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Boustead Projects Ltd’s Latest Earnings: What Investors Need to Know

Industrial real estate solutions provider, Boustead Projects Ltd (SGX: AVM), announced its second quarter earnings for the 2018 financial year yesterday. The period ran from 1 July 2017 to 30 September 2017.

Here are some of the important financial figures from the latest quarter:

1. Revenue tumbled 19% year-on-year to S$50.1 million. The decline was due to “lower revenue contributions from both the design-and-build and leasing businesses”.

2. Gross profit, however, rose 20% to S$18.5 million, mainly on the back of productivity improvements and unlocking of project cost savings.

3. Net profit surged 31% to S$9.5 million.

4. Consequently, basic and diluted earnings per share for the quarter was at 3.0 Singapore cents, up from the previous year’s 2.3 cents.

5. The firm had a robust balance sheet. As of 30 September 2017, the firm had S$36.6 million in net cash. This is an improvement from S$25 million in net cash that it had on 31 March 2017.

6. Net asset value rose from S$0.717 last year to S$0.742 in the latest quarter.

7. Cash flow from operations was at S$1.2 million and S$0.1 million was spent on capital expenditure. Therefore, Boustead Projects brought in S$1.1 million in free cash flow for the latest period, a massive decline from S$36.4 million raked in a year ago.

Design-and-build revenue declined 22% year-on-year as “the previous year’s comparative period had more projects with greater work progress, and there was a lower total value of contracts secured during FY2017 for revenue conversion during the quarter”.

Meanwhile, leasing revenue fell 5% year-on-year, largely due to the lack of contribution from 36 Tuas Road after AusGroup Ltd‘s (SGX: 5GJ) early lease termination in the fourth quarter of the 2017 financial year. This was partially offset by the contribution of new leases and development management fees.

The share of profit of an associated company and joint ventures for the quarter was S$0.3 million as compared to the previous year’s loss of S$0.6 million. The improvement was due to THAB Development Sdn Bhd’s completion of iBP @ Nusajaya Phase 1, partially offset by the elimination of construction and project management profits.

The firm’s order book now stands at around S$175 million, which comprises of unrecognised project revenue remaining at the end of the latest quarter plus the total value of new orders secured since then.

As for the outlook, Thomas Chu, managing director of Boustead Projects, said:

“Looking ahead, we expect the second half of FY2018 to remain challenging. We shall emphasise on driving cost and productivity improvements. Nonetheless, with our healthy balance sheet and strong net cash position, we will continue to pursue strategies to strengthen our smart building and eco-sustainable capabilities, focus on higher value industries, and build further strategic partnerships and platforms regionally.”

Shares of the firm are changing hands at S$0.86 currently. This translates to a price-to-book ratio of 1.2 and a trailing dividend yield of 1.7%, excluding any special dividend.

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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 of Boustead Projects Ltd.