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Boustead Singapore Limited’s Full-Year Earnings: What Investors Should Know

Boustead Singapore Limited (SGX: F9D), which was established in 1828, is a global service provider of infrastructure-related engineering services and geo-spatial technology. It has three business divisions: energy-related engineering; real estate solutions; and geo-spatial technology. It owns 51% of Boustead Projects Ltd (SGX: AVM), which is the group’s separately-listed real estate solutions division.

Last Wednesday, Boustead Singapore announced its financial results for the full-year ended 31 March 2018 (FY2018). Here are the key takeaways from the earnings announcement:

1. Revenue for the year fell 5% year-on-year to S$414.1 million. Sales from the energy-related engineering and real estate solutions divisions tumbled 2% and 12% respectively while that of geo-spatial technology rose 8%.

2. The energy-related engineering division performed poorly as the “global oil & gas recession continued for a third consecutive year”. The slump in the oil and gas business units’ revenue due to delays in major oil and gas expenditures by clients was offset by the water and wastewater engineering business unit’s massive jump in sales.

3. The geo-spatial technology division posted record revenue of S$116.6 million on the back of “steady demand across exclusive markets in Australia and South East Asia”. To know about Boustead Projects’ revenue performance, you can head here.

4. Boustead Singapore’s gross profit improved 6% for the year, from S$143.6 million to S$151.8 million. As a result, the gross profit margin rose to 37% compared to 33% in the previous year. The improvement was primarily due to better gross margin achieved by Boustead Projects. Despite that, Boustead Singapore warned that gross margin pressure remains present across the group.

5. Net profit slumped 24%, from S$33.3 million last year to S$25.4 million in FY2018. The fall was due to other losses during the year as compared to sizeable other gains in FY2017.

6. Last year, sizeable other gains were recorded largely due to AusGroup Ltd’s (SGX: 5GJ) early lease termination compensation, a gain on disposal of an available-for-sale financial asset and related financial effects that benefitted Boustead Projects.

7. After adjusting for other gains/losses, net profit for the latest period would have been 18% higher year-on-year at S$29.5 million.

8. Earnings per share (EPS) fell 23% to 4.9 Singapore cents while adjusted EPS rose 10% to 5.7 cents.

9. Boustead Singapore’s balance sheet strengthened for the year. As at the end of FY2018, the group had S$265.4 million in cash and cash equivalents, and S$70.5 million in total debt. This translates to a net cash position of S$194.9 million. In comparison, at the end of March last year, it had S$188.1 million in net cash.

10. Cash flow from operations for FY2018 declined by 35.1% to S$42.6 million. The group spent S$3.7 million in capital expenditure for the reporting period as opposed to S$2.0 million a year ago.

11. The board has proposed a final dividend of two Singapore cents per share. Together with the interim dividend of one cent already paid out, the total dividend for FY2018 would be three cents per share. This is a 50% increase over FY2017’s total dividend of two cents per share.

12. In FY2018, Boustead Singapore clinched S$313 million in contracts as compared to S$180 million in FY2017. The current order book backlog stands at around S$307 million.

13. Looking ahead, Boustead Singapore said:

“The Group is cautiously optimistic about business prospects. Global events in recent months indicate a slight improvement in the outlook for the Energy-Related Engineering Division. Meanwhile, stable business prospects are expected for the Real Estate Solutions Division and Geo-Spatial Technology Division.

The Group expects to continue to improve its performance in FY2019.”

Boustead Singapore shares ended Friday at S$0.785, giving a trailing price-to-earnings ratio of 16 and a dividend yield of 3.8%.

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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.