• Completion of Boustead Project’s (52.8%-owned subsidiary) value unlocking exercise could translate into special dividend being declared by Boustead Singapore, in our view.
• Strong earnings momentum to continue in 2HFY21. Excluding disposal gains, we forecast FY21F core net profit of S$49.4m (+35% y-o-y).
• Reiterate ADD on Boustead Singapore with higher target price of S$1.40.

Value Unlocked; We See Potential for Special Dividend From Boustead Singapore

• With the completion of Boustead Project (SGX:AVM)’s (Boustead Singapore (SGX:F9D)’s 52.8%-owned subsidiary) injection of 14 industrial properties into Boustead Industrial Fund (BIF) on 4 Mar, significant value of Boustead Project’s leasehold portfolio has been unlocked, in our view. Refer to our first take note: Boustead Projects - CGS-CIMB Research 2021-01-04: A Major Step To Unlocking Value.
• We see high possibility of special dividends being declared by Boustead Project in the upcoming FY21 (Apr 2020 to Mar 2021) results announcement. Given Boustead Singapore’s strong net cash position, we believe the payout will be passed on to its shareholders.
• Assuming 50% of net cash proceeds from Boustead Project’s asset disposal are paid out as special dividends, we estimate special dividend of S$0.07 per share (~8% yield) for Boustead Singapore.

Boustead's Strong Earnings Momentum to Sustain in 2H21F

• Excluding the disposal gains, we forecast Boustead Singapore to record core net profit of S$24.2m in 2HFY21 (Oct 2020 to Mar 2021), bringing full-year core net profit to S$49.4m (+35% y-o-y).
  • Underpinned by government agencies’ increasing use of smart book of S$203m (as of end-1H21).
  • Meanwhile, property segment should also return to profitability on the back of resumption of construction activities in Singapore, and strong leasing activities.

Reiterate ADD on Boustead Singapore With Higher Target Price of S$1.40

• Reiterate ADD on Boustead Singapore. With the fruition of the value-unlocking exercise, we reduce our FY21-23F core earnings per share forecasts by 0.4%-6.0%.
• Boustead Singapore is backed by S$175m of ex-Boustead Project net cash (S$0.35 per share, or 39% of market cap) and stable dividend yield of 3.3%.
• Potential re-rating catalysts include weaker order wins for energy and property segments.

Source: CGS-CIMB Research - 17 Mar 2021