• Boustead Singapore's FY21 core net profit of S$44.6m (+23% y-o-y) was driven by strong growth in geospatial and energy divisions. Special dividend brings total dividend to S$0.08 per share.
• We expect geospatial division to continue riding on COVID-19 tailwinds; but outlook on energy division is dependent on order replenishment in FY22F.
• Reiterate ADD on Boustead Singapore and SOP-based target price of S$1.40.

Boustead Reported Solid Set of FY21 Results

• Boustead Singapore (SGX:F9D) reported a record FY21 (Apr 2020 to Mar 2021) net profit of S$113.1m, coming in slightly below expectations at 96% of our FY21F forecast mainly due to underperformance of subsidiary Boustead Project (SGX:AVM). Other business segments' earnings were in line with expectations.
• Stripping off the one-off disposal gain, Boustead Singapore’s FY21 core net profit came in at S$44.6m (+23% y-o-y).
• Boustead Singapore declared a special dividend of S$0.04, bringing total FY21 dividend to S$0.08, representing a yield of 7.4%.

Strong Tailwinds for Geospatial Division

• Underpinned by government agencies’ GIS software and services to 325 organisations and companies around the region for pandemic-related efforts, and we believe this could help fuel further growth in coming years as potential clients explore deployment of the geospatial platform to their core operations.

Eyes on Order Replenishment in FY22F for Energy Segment

• Boustead Singapore’s energy engineering division saw PBT growth of 254% y-o-y in FY21 to S$28.0m, supported by a record order backlog secured pre-pandemic. The current order backlog for the division stands at S$96m. While moderately healthy, it remains significantly lower than last year’s (end-FY20: S$279m), hence the outlook beyond 2HFY22F is largely dependent on order replenishment in FY22F.

Reiterate ADD and Target Price of S$1.40

• Reiterate ADD on Boustead Singapore with an unchanged target price of S$1.40, still based on a 20% discount to its SOP-based valuation.
• Boustead Singapore's valuation remains attractive — stripping out its view of COVID-19 disruptions on its design-and-build segment.
• Potential re-rating catalysts include successful M&A execution by Boustead Projects to accelerate international expansion and order wins in its energy segment.
• Downside risks include weaker property segment margins.

Source: CGS-CIMB Research - 28 May 2021