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Thanks for the article! Really good interesting read into OMH. One question in my mind is if FF Wong has been an independent director since 2008 and if he happens to be aware of Cosmin intention for takeover, does it mean there will be a conflict in interest if any M&A were to occur.

Seems like OMH is not exactly a good investment when most of the pricing power is determined by the Chinese majority holders and at the same time seem to be lacking of funds. So there must be something that really caught FF Wong eye for this investment.
As a value seeker in a cyclical industry, the time to buy is probably now when commodity cycles are down. When commodity prices are sky rocketing, that is when M&A and cost cutting will take place in the industry. It is difficult to buy when commodity prices are in the dumps. The trend is pretty similar to that of shipping industry - the NOLs etc.

As the media highlighted, it is probably the smelting plant that Boustead is looking for. As highlighted by OMH, the absence of a smelter outside China (where costs is fast rising due to environmental concerns and lack of cheap sustainable clean energy supplies) is prompting the potential emergence of a similar industry in a country where there are better corporate governance and regulations. With Bakun Dam commissioning, the availability of cheap clean energy supplies is a major consideration for the emergence of heavy industries that are essential as product input for steel production outside China.
OMH just signed a Power Purchase Agreement today - announced on ASX. (See Link)

http://www.asx.com.au/asxpdf/20120202/pd...v1wy75.pdf

(Vested in Boustead)
Thanks for the update. Boustead's participation in OMH's recent placement is to help kick-up an important transformation in OMH's business profile - value add the miner's raw manganese minerals.

Objectively, OMH appears to have over stretched itself in moving both upstream and downstream. Upstream - purchasing a stake in highly cost competitive mine in South Africa that is projected to deliver its first shipment in 2H 2012. Downstream - the strategic projects to process manganese which are currently dominated by increasingly expensive producers in China. With manganese prices at cyclical lows, it is inevitable that OMH is facing pressures to raise substantial funding at crucial times.

While it appears that Boustead is eyeing bigger things beyond simply participating in a cyclical mining stock (since media reports strongly suggest that it is eyeing a stake in a less cyclical smelting plant in Sarawak), it is likely that its investment in OMH will pay off rewardingly once the demand-supply imbalance in global manganese prices correct itself. moreover with global liquidity flushing as a result of continued economic pressures in US and Eurozone, it will be a matter of time that commodity prices regain strength.

After sitting so tight on its hard earn cash kitty for so many years, the latest move by Boustead certainly warrant close monitoring as proper execution is likely to yield sustainable generous shareholders returns.
More details available on OMH. Not exactly the type of cyclical earnings that Boustead is looking forward to but on the speculated Sarawak smelter project, it is a highly lucrative one.

OMH has indicated the following:

• Company and industry transforming project producing 600ktpa of silicon based steelmaking ferro alloys
• Lowest cost quartile silicon based ferro alloy producer located close to captive hydro power, input raw materials
and end-user markets
• Capex ~US$500m, Project NPV ~US$670m, Project IRR of 30%, expected Project Payback of 3 years
• 500MW of competitively priced long term hydroelectric power supply, coastal industrial land with direct access to
dedicated port facility, geographical proximity to raw materials and Asian steel mills, tax incentives, no import
and/or export duties and comprehensive purpose build industrial infrastructure
• Strategic investment and off-take partnerships being established
• First production expected Q1 2014, full commercial operation expected Q2 2015
from the presentation, the EPC contract has not been awarded yet.

Boustead still stands a good chance to win the EPC contract or at least part of the EPC contract.
Boustead's forte is not in smelter technology and there is no shortage of capable and competitive EPC contractors in China.

If you care to look through Cahya Mata Sarawak's KLSE announcements, most of the details of the project has been wrapped up. Its at the financing stage and that is where OMH is falling behind and need a cash rich strategic investor to jump start the entire process.

Show the 30% money and project will be bank rolled by Standard Chartered and everything will be implemented. Main thing from here will be execution risks that will be inherent in many of such projects.

One day at a time but its a good new source of recurrent earnings if implemented carefully. Perhaps its also important milestone for FF Wong to move Boustead towards his long spoken dream of S$100m profit type of company.

Have full faith and be long term.
smelting maybe better business than mining, but still a bad cyclical business to start with.


there is no point for boustead to be involved in such a bad industry.
(08-02-2012, 04:41 PM)greengiraffe Wrote: [ -> ]Perhaps its also important milestone for FF Wong to move Boustead towards his long spoken dream of S$100m profit type of company.

Just curious Greengiraffe, what do you mean by $100m "profit type" company?

2 floors at Boustead House up for sale
By CARINE LEE

Two industrial floors in Boustead House were on Wednesday put up for sale by expression of interest.

The property at Ubi Avenue comprises of 17 strata factory units with a combined strata floor area of 4,182 sqm and has a balance tenure of about 45 years.

The two floors are part of the seven-storey flatted building located within the Boustead Industrial Park.

'We believe that the property is likely to fetch in excess of $350 per sqft on strata area,' said Shaun Poh, DTZ's head of investment advisory services and auction.

A unit in Boustead House with the size of 2,464 sq ft was transacted at $378 psf on strata area in May 2011.

The sale, conducted through an expression of interest, will close on Thursday, Feb 23 at 3pm.