Hi VS,
For Boustead's DB&L portfolio, there is no "contract value" per se. Since it is leased back to the client, Boustead Projects (now 100% owned) will collect recurring and stable rental income. Currently, the leasehold properties take up >96,000 sqm, and I envisage that the portfolio will grow over time. I give them about 4-5 years to build up the portfolio to a level above 200,000 sqm, then as Keith Chu of Boustead mentioned in The Edge, the properties' values can then be unlocked by selling them to a REIT, or by IPO-ing them (much like what Fragrance is trying to do now).
As for having faith in FF Wong, well we all know him by now and his conservative style. Only problem is that he's getting older and no one can prevent that! Boustead is the proverbial slow and steady performer - for a company like Hyflux there is a lot of new and fanfare but drilling down to the numbers, it's basically BOT which involves a huge initial cash outlay only to see cash flows trickling in much later.
So for myself, I'd rather choose "boring" companies which give me a decent yield, and which allow me to sleep peacefully every night.
(28-03-2012, 10:20 PM)Musicwhiz Wrote: [ -> ]Hi VS,
For Boustead's DB&L portfolio, there is no "contract value" per se. Since it is leased back to the client, Boustead Projects (now 100% owned) will collect recurring and stable rental income. Currently, the leasehold properties take up >96,000 sqm, and I envisage that the portfolio will grow over time. I give them about 4-5 years to build up the portfolio to a level above 200,000 sqm, then as Keith Chu of Boustead mentioned in The Edge, the properties' values can then be unlocked by selling them to a REIT, or by IPO-ing them (much like what Fragrance is trying to do now).
As for having faith in FF Wong, well we all know him by now and his conservative style. Only problem is that he's getting older and no one can prevent that! Boustead is the proverbial slow and steady performer - for a company like Hyflux there is a lot of new and fanfare but drilling down to the numbers, it's basically BOT which involves a huge initial cash outlay only to see cash flows trickling in much later.
So for myself, I'd rather choose "boring" companies which give me a decent yield, and which allow me to sleep peacefully every night.
I think it is helpful to view the DBL portfolio and its potential monetization into a REIT in light of Freightlinks creation of Sabana REIT last year.
In Oct 2010, FL proposed to divest its 5 properties into a newly formed REIT which it will in turn manage through a 51% owned JV. The properties had a book value of $91.0 million and was sold for $192.9 million. The total GFA of the 5 properties was 81,257 sqm which compares well with Boustead's portfolio of 96,000 sqm. Sabana was eventually listed with a portfolio of 15 properties with GFA exceeding 305,650 sqm. Similarly CWT divested 2 properties to Cache (which it manages together with ARA) for $445.0 mil and it had book value of $163.2 million. The 2 properties GFA stood at 245,000 sqm.
I guess the main benefit of a REIT would be converting taxed rental income into tax-free distributions (which comes from tax-free rental income) and recurring management fees.
http://www.freightlinks.net/SGXReports/SGX104.pdf [FL Sale and Leaseback Announcement]
http://cwt.listedcompany.com/newsroom/20...993D.1.pdf [CWT Sale & Leaseback Announcement]
I am not saying that Boustead will under-take this or that this might even be a good move. Just saying that the portfolio size allows it to under-take it if it chooses to though the actual REIT portfolio size has to be a lot larger.
(Not Vested)
OMH ended at the highest level of A$0.43 since Boustead has taken a strategic placement @A$0.35.
If another strategic placement of convertible notes due 2016 to Hanwa is any indication, the conversion price of A$0.80 could be indicative of the latent value of OMH.
http://www.asx.com.au/asxpdf/20120307/pd...p3w9wh.pdf
(29-03-2012, 02:22 PM)greengiraffe Wrote: [ -> ]OMH ended at the highest level of A$0.43 since Boustead has taken a strategic placement @A$0.35.
If another strategic placement of convertible notes due 2016 to Hanwa is any indication, the conversion price of A$0.80 could be indicative of the latent value of OMH.
http://www.asx.com.au/asxpdf/20120307/pd...p3w9wh.pdf
This simply indicates to me that once OMH’s share price crosses A$0.80, it will be EPS dilutive for existing shareholders as Hanwa would wish to convert the CN into shares. By itself, it does not really indicate the merits of OMH’s business; they are simply employing different methods of raising funds, and CN would give Hanwa a yield of 5% while they wait for the business to improve (through investment in the Sarawak Project). It is also noteworthy to consider whether OMH, at the point in time, will be paying a dividend, and whether the dividend yield exceeds 5% by 2016; otherwise Hanwa may just choose to retain its CN at 5% and not choose to convert unless they perceive massive upside to the share price (i.e. capital gains will trump bond coupon yield).
Business Times - 29 Mar 2012
Boustead bags Bombardier building job
By VEN SREENIVASAN
(SINGAPORE) Engineering and construction group Boustead Singapore has secured a design-build- and-lease contract from Bombardier Aerospace for a 6,490 square metre integrated aircraft service centre and office facility at the Seletar Aerospace Park.
This is Boustead's 13th project in the aerospace sector, but the 10th design-build-and-leaseback facility.
The latest contract comes barely a year after the company completed the 36,000 sq m Roll-Royce wide cord blade fan facility and test bed facility at Seletar.
The Bombardier Aircraft Service Centre is designed to undertake the maintenance, repair and servicing of Bombardier Learjet, Challenger and Global business aircraft families. It will also integrate a three-floor office.
Completion is expected in 2013.
Besides this and the Roll-Royce projects, other aerospace projects undertaken by Boustead include Bell Helicopter's MRO facility and Hawker Pacific's MRO facility.
Thomas Chu, managing director of Boustead Projects (the business unit handling the project) noted that this was a key project under Phase 3 of the development of the Seletar Aerospace Park.
'Singapore continues to be one of the world's best aerospace and MRO hubs. With Phase 3 of the Seletar Aerospace Park commencing development in the second half of 2012, we will be looking to strengthen our position in this sector,' he said.
More importantly, the Bombardier Aircraft Service Centre is the 10th industrial facility in Boustead's portfolio of industrial leasehold facilities (both completed and under construction) and the second secured during FY2012, taking the portfolio size to an estimated gross floor area of over 96,000 sq m.
The company, which has four main divisions - energy engineering, water & waste-water engineering, industrial real estate, and geo-spatial technology - has been pushing hard to build up a stream of projects which will provide recurring income and smoothen out the sometimes lumpy and volatile project-based income.
As the latest contract is not on a design-and-build arrangement, it will not be added to the Boustead group's order book (as at the end of December plus new orders since then), which currently stands at $345 million.
(29-03-2012, 03:00 PM)Musicwhiz Wrote: [ -> ] (29-03-2012, 02:22 PM)greengiraffe Wrote: [ -> ]OMH ended at the highest level of A$0.43 since Boustead has taken a strategic placement @A$0.35.
If another strategic placement of convertible notes due 2016 to Hanwa is any indication, the conversion price of A$0.80 could be indicative of the latent value of OMH.
http://www.asx.com.au/asxpdf/20120307/pd...p3w9wh.pdf
This simply indicates to me that once OMH’s share price crosses A$0.80, it will be EPS dilutive for existing shareholders as Hanwa would wish to convert the CN into shares. By itself, it does not really indicate the merits of OMH’s business; they are simply employing different methods of raising funds, and CN would give Hanwa a yield of 5% while they wait for the business to improve (through investment in the Sarawak Project). It is also noteworthy to consider whether OMH, at the point in time, will be paying a dividend, and whether the dividend yield exceeds 5% by 2016; otherwise Hanwa may just choose to retain its CN at 5% and not choose to convert unless they perceive massive upside to the share price (i.e. capital gains will trump bond coupon yield).
Hi Musicwhiz,
Thanks for your analysis. From my naive understanding, mining companies can go from zero to hero and vice versa. Unfortunately, Singapore mkt lacks the universe of resources companies and hence the strategies deployed by these companies are a little difficult to comprehend. This is no disrespect to your analysis as there is little fundamental flaws in your explanations.
On OMH, I have full faith in FF's choice especially when he said he had been badly burnt in a portfolio of them before. As he is deploying Boustead's hard earned cash, there must be a carefully thought through game plan that has yet to be unveiled. As shareholders, we will have to wait patiently and FF is likely to detail them to us when the time is ripe.
In so far as my research has provided (most of which have been detailed in previous threads), OMH's future appears to be in smelting. Bakun's speculated tariff of 9 sen/Kwh and an annual escalation of 1.5% for 20 years (reported extensively on thestar.com.my) - if it is indeed true, it will be a big steal in the light of the current global energy prices.
In any event, Boustead has bought a strategic sizable stake in OMH at near basement price, substantially below book value. There is little to worry about even if manganese prices stay low especially when OMH has been substantially re-capitalised to position for its mega project. Moreover, OMH has already roped in key customers as strategic partners in the smelter. Too good to be true?
(29-03-2012, 06:12 PM)Musicwhiz Wrote: [ -> ]Business Times - 29 Mar 2012
Boustead bags Bombardier building job
By VEN SREENIVASAN
(SINGAPORE) Engineering and construction group Boustead Singapore has secured a design-build- and-lease contract from Bombardier Aerospace for a 6,490 square metre integrated aircraft service centre and office facility at the Seletar Aerospace Park.
This is Boustead's 13th project in the aerospace sector, but the 10th design-build-and-leaseback facility.
The latest contract comes barely a year after the company completed the 36,000 sq m Roll-Royce wide cord blade fan facility and test bed facility at Seletar.
The Bombardier Aircraft Service Centre is designed to undertake the maintenance, repair and servicing of Bombardier Learjet, Challenger and Global business aircraft families. It will also integrate a three-floor office.
Completion is expected in 2013.
Besides this and the Roll-Royce projects, other aerospace projects undertaken by Boustead include Bell Helicopter's MRO facility and Hawker Pacific's MRO facility.
Thomas Chu, managing director of Boustead Projects (the business unit handling the project) noted that this was a key project under Phase 3 of the development of the Seletar Aerospace Park.
'Singapore continues to be one of the world's best aerospace and MRO hubs. With Phase 3 of the Seletar Aerospace Park commencing development in the second half of 2012, we will be looking to strengthen our position in this sector,' he said.
More importantly, the Bombardier Aircraft Service Centre is the 10th industrial facility in Boustead's portfolio of industrial leasehold facilities (both completed and under construction) and the second secured during FY2012, taking the portfolio size to an estimated gross floor area of over 96,000 sq m.
The company, which has four main divisions - energy engineering, water & waste-water engineering, industrial real estate, and geo-spatial technology - has been pushing hard to build up a stream of projects which will provide recurring income and smoothen out the sometimes lumpy and volatile project-based income.
As the latest contract is not on a design-and-build arrangement, it will not be added to the Boustead group's order book (as at the end of December plus new orders since then), which currently stands at $345 million.
The extra 70 hectares is a fact, no hype. As Boustead Projects has been a leading high value added turnkey project manager in various of the large scale projects in previous phases, we can be hopeful that the new phases will keep them busy in years to come.
(29-03-2012, 09:21 PM)greengiraffe Wrote: [ -> ]Hi Musicwhiz,
Thanks for your analysis. From my naive understanding, mining companies can go from zero to hero and vice versa. Unfortunately, Singapore mkt lacks the universe of resources companies and hence the strategies deployed by these companies are a little difficult to comprehend. This is no disrespect to your analysis as there is little fundamental flaws in your explanations.
On OMH, I have full faith in FF's choice especially when he said he had been badly burnt in a portfolio of them before. As he is deploying Boustead's hard earned cash, there must be a carefully thought through game plan that has yet to be unveiled. As shareholders, we will have to wait patiently and FF is likely to detail them to us when the time is ripe.
In so far as my research has provided (most of which have been detailed in previous threads), OMH's future appears to be in smelting. Bakun's speculated tariff of 9 sen/Kwh and an annual escalation of 1.5% for 20 years (reported extensively on thestar.com.my) - if it is indeed true, it will be a big steal in the light of the current global energy prices.
In any event, Boustead has bought a strategic sizable stake in OMH at near basement price, substantially below book value. There is little to worry about even if manganese prices stay low especially when OMH has been substantially re-capitalised to position for its mega project. Moreover, OMH has already roped in key customers as strategic partners in the smelter. Too good to be true?
Haha, good to engage you in a conversation as you are one of the more eloquent and articulate people I've spoken to; and with regards to Boustead and OMH you obviously have a lot of information sources at your fingertips and are very good at compiling them and making sense of the data. Kudos to you for that!
While it is obviously good to feel optimistic, I am more cautious and guarded in my investments; even with respect to an established businessman cum CEO such as FF Wong.
The Endowment Effect can make one a lot more comfortable than one should be, and most times selective perception and retention may also cause us to perceive news a lot more favourably than it really is. Since the area of mining and commodities is new to Boustead, I am, at most, neutral; and at worst, slightly negative on this deal as I do not fully understand not just manganese mining, but also the intricacies of mine production, yield and other salient details.
To say that FF Wong has a game plan would not be far wrong, but whether he will actually reveal it or not may be subject to whether things actually go the way he expected them to. He could have few scenarios up his sleeve, from optimistic to downright disastrous; so as shareholders we will hope for a good outcome. The rise in OMH's share price does not signal anything to me at the moment, as Mr. Market has his usual mood swings and right now the long-term value of OMH is still not very apparent to me; as they have yet to start production at Tshipi Borwa mine and the Sarawak mine is still probably years from being fully operational.
As for Boustead purchasing below book value, I've learnt over the years that book value can be rather fleeting concept, especially if losses start to erode your asset base and your book value suffers from impairments and write-downs. Essentially, what I am saying is that book value offers no protection against downside - it is the (potential) earnings and (future) cash flows of a Company/Business which determines if the price paid was fair in the first place, and whether this represents a margin of safety.
At the moment, I feel it is too early to tell even though the pieces of the jigsaw are slowly starting to fit into place.
Regards.
(29-03-2012, 11:16 PM)Musicwhiz Wrote: [ -> ] (29-03-2012, 09:21 PM)greengiraffe Wrote: [ -> ]Hi Musicwhiz,
Thanks for your analysis. From my naive understanding, mining companies can go from zero to hero and vice versa. Unfortunately, Singapore mkt lacks the universe of resources companies and hence the strategies deployed by these companies are a little difficult to comprehend. This is no disrespect to your analysis as there is little fundamental flaws in your explanations.
On OMH, I have full faith in FF's choice especially when he said he had been badly burnt in a portfolio of them before. As he is deploying Boustead's hard earned cash, there must be a carefully thought through game plan that has yet to be unveiled. As shareholders, we will have to wait patiently and FF is likely to detail them to us when the time is ripe.
In so far as my research has provided (most of which have been detailed in previous threads), OMH's future appears to be in smelting. Bakun's speculated tariff of 9 sen/Kwh and an annual escalation of 1.5% for 20 years (reported extensively on thestar.com.my) - if it is indeed true, it will be a big steal in the light of the current global energy prices.
In any event, Boustead has bought a strategic sizable stake in OMH at near basement price, substantially below book value. There is little to worry about even if manganese prices stay low especially when OMH has been substantially re-capitalised to position for its mega project. Moreover, OMH has already roped in key customers as strategic partners in the smelter. Too good to be true?
Haha, good to engage you in a conversation as you are one of the more eloquent and articulate people I've spoken to; and with regards to Boustead and OMH you obviously have a lot of information sources at your fingertips and are very good at compiling them and making sense of the data. Kudos to you for that!
While it is obviously good to feel optimistic, I am more cautious and guarded in my investments; even with respect to an established businessman cum CEO such as FF Wong. The Endowment Effect can make one a lot more comfortable than one should be, and most times selective perception and retention may also cause us to perceive news a lot more favourably than it really is. Since the area of mining and commodities is new to Boustead, I am, at most, neutral; and at worst, slightly negative on this deal as I do not fully understand not just manganese mining, but also the intricacies of mine production, yield and other salient details.
To say that FF Wong has a game plan would not be far wrong, but whether he will actually reveal it or not may be subject to whether things actually go the way he expected them to. He could have few scenarios up his sleeve, from optimistic to downright disastrous; so as shareholders we will hope for a good outcome. The rise in OMH's share price does not signal anything to me at the moment, as Mr. Market has his usual mood swings and right now the long-term value of OMH is still not very apparent to me; as they have yet to start production at Tshipi Borwa mine and the Sarawak mine is still probably years from being fully operational.
As for Boustead purchasing below book value, I've learnt over the years that book value can be rather fleeting concept, especially if losses start to erode your asset base and your book value suffers from impairments and write-downs. Essentially, what I am saying is that book value offers no protection against downside - it is the (potential) earnings and (future) cash flows of a Company/Business which determines if the price paid was fair in the first place, and whether this represents a margin of safety.
At the moment, I feel it is too early to tell even though the pieces of the jigsaw are slowly starting to fit into place.
Regards.
A Friend in need is a Friend Indeed.
If you are interested to find out more on a wonder mining stock, this one is for you: Buru Energy - BRU.AX. I will be a gundu in it.
http://info.sgx.com/webcoranncatth.nsf/V...100325C1A/$file/Boustead_Announcement-Boustead_Subsidiary_Awarded_SGD42M_Contract_from_Cenco_to_Build_Singapore_Aero_Engine_Services_Integrated_Test_Bed_Facility-30.03.2012.pdf?openelement
http://info.sgx.com/webcoranncatth.nsf/V...1003CC31F/$file/Boustead_Announcement-Disposal_of_a_Wholly_Owned_Subsidiary-30.03.2012.pdf?openelement
http://info.sgx.com/webcoranncatth.nsf/V...1003A9560/$file/Boustead_Announcement-Sale_of_Strata_Title_Units_by_Subsidiary-30.03.2012.pdf?openelement
Bagged a contract in SAP S$42m, sold a DBL project as client exercise option to buy bringing DBL portfolio back down to 87k sqm (from 96k sqm) and sold former Boustead House office space.
Impact: Locked in extra one-off net profit of S$10.8m for FY3/12, EPS +2.1 cents, raked in net cash of S$29.2m or 5.8 cents a share.
hawer pacific deal only made around 2 million, compared to around 20 million for the IBM buildings, IIRC. it seems that the margin of Boustead Projects is dropping drastically. Both were DBL projects and the other party excised their call options to acquire the property.