2018 is coming to an end.
And investors would hope to put the year behind quickly due to the stock market volatility experienced in the last few months. However, due to the recent market pullback, many shares are selling at cheap prices. Let’s look at one such company in this first part of a three-part series of articles. The other two articles will be introducing one cheap share each.
Introduction to Company #1
Boustead Projects Ltd (SGX: AVM) is an industrial real estate solutions provider in Singapore, with core engineering expertise in design-and-build and development of industrial facilities for both multinational corporations and local companies.
Latest business developments
The company’s latest quarterly results do not look good: Revenue rose 21% year-on-year to S$60.6 million, but net profit tumbled 16% to S$8.0 million. Over the longer term though, Boustead Projects’ prospects look bright. Thomas Chu, the company’s managing director, shared the following comment in the latest earnings update:
“We are cautiously optimistic that our market leadership, sound financial position and strong business development efforts will allow us to capitalise on a steady pipeline of opportunities both in Singapore and overseas for the remainder of FY 2019. We continue to invest in smart and eco-sustainable building capabilities, drive cost and productivity improvements, and intensify our efforts in securing strategic partnerships and acquisition targets that can extend our capabilities and support our market expansion. We look forward to keeping the market updated on our business development efforts.”
True to its word, Boustead Projects announced earlier this week that it had secured its largest contract and largest public sector project ever.
The contract, with a value of around S$242 million, was awarded by JTC Corporation for a Multi-Storey Recycling Facility (MSRF) project located at Kranji Loop. The latest contract-win also doubled Boustead Projects’ order book backlog to S$460 million, the highest level in the company’s history. Moreover, the company said that the contact is expected to have a “positive material impact” on its profitability and earnings per share for its financial years ending 31 March 2020 and 31 March 2021.
Why it’s cheap
Since the MSRF project announcement, Boustead Projects’ share price has barely budged. This could mean that Mr. Market has yet to recognise the significance of the new contract. At Boustead Projects’ current share price of S$0.80, the company has a price-to-book (PB) ratio of 0.92. A PB ratio of below 1 for an asset-heavy company could mean that it is undervalued.
The second cheap share will be introduced soon, so stay tuned! [Editor’s note: The second part of the series has been published and it can be found here.]
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Boustead Projects Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Boustead Projects Ltd.