Boustead Projects Limited (SGX: AVM), or BPL, is a leading industrial real estate solutions provider with engineering expertise in design-and-build industrial facilities for multinational corporations and local enterprises. The group is present in Singapore, Malaysia, Vietnam and China, and is a 53%-owned subsidiary of Mainboard-listed Boustead Singapore Limited (SGX: F9D).
BPL recently released its fiscal year 2019 (FY 2019) annual report, and there was a significant amount of discussion on the design and build division’s record number of contracts secured during the year and also BPL’s growing leasehold property portfolio. There were also clear indications throughout the annual report which point to a potential bumper dividend being paid out in the near future. Here’s why.
Partnerships to grow the portfolio further
BPL has forged new partnerships during the fiscal year to enable it to achieve its goal of further growing its leasehold property portfolio. It started off with the Abu Dhabi Investment Council to form the Boustead Development Partnership (BDP), had already yielded strong and positive results by clinching major contracts. These new partnerships will set the stage for the group to be able to bid for higher-value contracts and larger projects, which provide additional income and cash flow.
Plans to unlock value could lead to special dividend
BPL’s leasehold property portfolio has been growing for many years and as at 31 March 2019, it contains 24 wholly-owned and jointly-owned properties, 19 of which are completed and five are still under construction. Currently, the 19 properties have a market value of around S$800 million, and this will rise above S$1 billion when the remaining five properties are completed.
BPL’s leasehold properties are currently reflected at cost less accumulated depreciation, which totalled around S$208.8 million on its balance sheet, as of 31 March 2019. Thus, the market value of these properties can be seen to be substantially higher than the net book value, and management is evaluating various options to monetise the value of these properties.
The unlocking of the latent potential within these properties would result in either a large inflow of cash into BPL’s books, or the creation of a new and recurring income stream for the group. The upshot? There’s a good chance that BPL may reward shareholders with a bumper dividend when that happens.
Exciting times ahead
With the above plans and alliances forged, it seems that exciting times are ahead for BPL’s investors. Investors should continue to monitor the growth and plans for BPL’s leasehold property portfolio, and patiently hold out for a potential dividend bonanza in the years to come.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Royston Yang owns shares in Boustead Projects Limited and Boustead Singapore Limited. The Motley Fool Singapore has recommended shares of Boustead Projects Limited and Boustead Singapore Limited.