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Business Times - 14 Feb 2012

Boustead Q3 profit takes a dive after Thai floods

By VICTORIA HO

BOUSTEAD Singapore's net profit nosedived more than half following disruptions in its supply chain after the Thai floods last year.

The mainboard-listed infrastructure engineering services firm said it achieved net profit of $5.5 million and $23.2 million for the three and nine months ended Dec 31, 2011, respectively.

The figures are a drop of 58 per cent and 57 per cent respectively from the year-earlier levels.

The company blamed the severe flooding in Thailand last year, which disrupted operations at a subcontractor's fabrication site.

This caused an 'unexpected disruption' in Boustead's supply chain, which saw its engineering services segment take a hit in revenue, it said.

Its real-estate solutions segment saw a 51 per cent decline in Q3 revenue to $34.8 million. Its energy-related engineering division maintained revenue at $27.8 million.

Water and waste water engineering revenue was $7.8 million, 8 per cent higher, and geo-spatial technology revenue was $24.8 million, up 14 per cent from the previous year.

Overall revenues for the three- and nine-month period were $95.3 million and $276.9 million, down a respective 25 per cent and 39 per cent from the year before.

Wong Fong Fui, Boustead's group CEO and chairman, said the company's recent A$17.5 million (S$23.6 million) purchase of an 8.6 per cent stake in Sydney-listed manganese producer OM Holdings 'represents our entry into the natural resources and mining sector'.

OM Holdings is one of the top manganese ore producers globally.

Boustead ended the period with $175.8 million in cash and cash equivalents. It did not declare a dividend for the period.

Yesterday, the counter closed at 86.5 cents, down 0.5 cents.

Few points that I noted in Q3:
1. Although Geo Spatial's profit increased YoY, the PBT margin actually hovers lower around 21%.
Note: Average for FY2010, FY2011, even FY2012 Q1 and Q2 are 25%.
2. No substantial order won by engineering services, including BP, which is somehow disappointing.
3. Until this point of time, NOT even a single order won by Salcon (zero score) and Salcon still losing money.
Isn't it time to really consider selling this unit??

(15-02-2012, 08:23 PM)valuestalker Wrote: [ -> ]3. Until this point of time, NOT even a single order won by Salcon (zero score) and Salcon still losing money.
Isn't it time to really consider selling this unit??

I'd actually suggested this before in my half-yearly commentary on Boustead's results over the years, after seeing this Division splutter and struggle for many years with legacy issues. Now that it seems to be encountering problems again, I would concur with you that selling it and recycling the capital to more promising ventures seems to be the optimal solution at this point! Whether FF Wong will consider it or not is another matter...haha.

1. Salcon has been bought for 10 years. Where is the turnaround? Investors will get nervous about it.

2. Industrial Solution is losing its shine. Although Geo-Spatial has been a steady performer, I think the biggest bottom line contributor in the last few years has been industrial solution.

3. Energy related service margin is being squeezed and the order are diminishing.

4. Resource and mining sector? seriously? in this kind of environment? low could get lower.. EU is or going to be in recession. China, the biggest natural resource consumer could be hard-landing or soft-landing, it is reducing its appetite for natural resource with a gloomy world economy.

Some of the experience investors here seriously have little feel for running a business. Fortunately, one can easily switch between liquid investments and start to think that simply because of success in equities investments, they can easily translate their successes into running business. If it is so simple to run a business, then there will be no need to list a company.

Over the years, there are so many companies that have evaporated and Boustead remains steadfastly standing with growing cash pile and steady growth in dividend payouts.

Boustead is not a company for excitement. Business is about taking calculated risks and reaping returns. I have been holding my shares coming close to a decade and has never felt so at ease.

For those who are concerned over the health of Boustead, there is always an easy way - sell it and switch to a better idea. However, Boustead as in itself will keep transforming to cope with the ever-changing global economic conditions. It remains one of the oldest company alongside with Guthrie in Singapore.

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(15-02-2012, 10:52 PM)freedom Wrote: [ -> ]1. Salcon has been bought for 10 years. Where is the turnaround? Investors will get nervous about it.

2. Industrial Solution is losing its shine. Although Geo-Spatial has been a steady performer, I think the biggest bottom line contributor in the last few years has been industrial solution.

3. Energy related service margin is being squeezed and the order are diminishing.

4. Resource and mining sector? seriously? in this kind of environment? low could get lower.. EU is or going to be in recession. China, the biggest natural resource consumer could be hard-landing or soft-landing, it is reducing its appetite for natural resource with a gloomy world economy.

freedom, free your mind of worries. Sell everything and hide your cash under your bed. No amount of people and demand for basic services will save anyone in a amah garden scenario that an ultimate pessimist will have imagine.

my only question is that why did not Boustead announce a profit warning or even warn investors earlier that there will be an impact to the engineering services when the floods were months ago. We have seen many companies like adampak has addressed that concern via announcements.

(15-02-2012, 11:23 PM)greengiraffe Wrote: [ -> ]freedom, free your mind of worries. Sell everything and hide your cash under your bed. No amount of people and demand for basic services will save anyone in a amah garden scenario that an ultimate pessimist will have imagine.

thanks for the advice. I have already reduced my exposure to a proper level to reflect my adjusted confidence.

is it my imagination?

no disrespect, how long has FF Wong been promising of turnaround of Salcon Water? did it happen? Maybe FF Wong wants to sell Salcon, but how to sell a loss-making business in a depressed environment?

Lehman Brothers had 150 years history, so what? It collapsed in less than one year. Eastman Kodak, 131-year history, filed for bankruptcy recently. I am not implying that Boustead is going to fail, but confidence purely based on history without facts backing is weak.

Everything has its price, when it fails to deliver, it is time to cut the exposure.

(15-02-2012, 11:47 PM)freedom Wrote: [ -> ]no disrespect, how long has FF Wong been promising of turnaround of Salcon Water? did it happen? Maybe FF Wong wants to sell Salcon, but how to sell a loss-making business in a depressed environment?

Lehman Brothers had 150 years history, so what? It collapsed in less than one year. Eastman Kodak, 131-year history, filed for bankruptcy recently. I am not implying that Boustead is going to fail, but confidence purely based on history without facts backing is weak.

Everything has its price, when it fails to deliver, it is time to cut the exposure.

Good to hear your views. As greengiraffe mentioned, investors should definitely act according to how they feel. Since you feel uncomfortable, naturally you would reduce your exposure.

Salcon has a reputation which has been built up over the years, and its name itself should at least enable Boustead to sell it off at book value, if not at a slight premium. Of course, with the Water industry as it is now, perhaps I may be wrong! But from my understanding of Salcon, it does have some competitive edge compared to the more mundane water treatment companies out there (referring to the myriad players in China).

While I agree that history cannot be used to predict the future, I can safely say that Boustead would not "implode" anytime soon. Note that although Real Estate has been providing the profit boost for the last few years, it has been Boustead's shrewd divestment of one leasehold property per year which has boosted the coffers. Also, attention should be directed at Geo-Spatial as it is the "Cash Cow" for Boustead; and this division has steady margins and is growing revenues/PBT at a steady rate as well. Do remember too that the DB&L portfolio being steadily built up now is gearing Boustead towards more "predictable" revenues and cash flows, which is why there have been less D&B contracts announced recently. Evidence can be found in the Cash Flow Statement with the capitalization of leasehold property. Salcon does not take up a big portion of Boustead's revenues and therefore would not drag profits down by too much. As for Oil & Gas Division, existing contracts will be delivered but there was a delay, and I find that acceptable.

We must also remember that businesses are subject to any number of unpredictable conditions, and quarterly results are never a good gauge of whether a Company can successfully navigate rough waters over the medium-term.

(05-01-2012, 10:20 PM)valuestalker Wrote: [ -> ]Boustead latest announcement:

The Board of Directors of Boustead Singapore Limited (the "Company") wishes to
announce that the Company’s 100% owned subsidiary, Boustead Projects Pte Ltd, has
incorporated a wholly owned subsidiary in Singapore known as BP-BBD Pte. Ltd.
(“BP-BBD”).

Wondering what is BBD, could it be Bombardier inc?
Not speculating, just guessing for the sake of guessing.

Anw, vested.

saw BT article about Bombardier is going to invest in SAP. good probability for boustead to land a contract.

This is it as Boustead as a good share in Seletar Aerospace Park (SAP) be it in turnkey design & build or the more recurrent design, build and leaseback. Another feather in the cap for Boustead Projects and surely another buffer for higher dividend income stream to shareholders in time to come.

Published February 15, 2012

Bombardier to set up maintenance base in Seletar

By VEN SREENIVASAN

(SINGAPORE) Canadian regional jetmaker Bombardier is poised to announce that it is setting up an MRO (maintenance, repair and overhaul) base in Seletar Aerospace Park (SAP).

Flying in: Canadian regional jetmaker Bombardier is said to have signed up for a runway-dependent plot under Phase II of Seletar Aerospace Park

BT understands that the jetmaker has signed up for a runway-dependent plot under Phase II of the park. No details have been announced, but the company will be joining the almost one dozen international players in the aerospace hub.

On Monday, Prime Minister Lee Hsien Loong officially opened Rolls-Royce's $700 million Trent engine and wide-chord making facility. Hawker Pacific will launch its new facility in Seletar today .

Other multinational aerospace players that have set up plants and operations in SAP include engine maker Pratt & Whitney, Eurocopter, Bell & Cessna, Fokker, and Jet Aviation. Local 'big boy' ST Aerospace has a huge MRO facility there as well.

But JTC Corp CEO Manohar Khiatani said he was particularly pleased with the participation by local SMEs (small and medium-sized enterprises) in SAP.

'Our business aviation centre is already 80 per cent taken up by some 20 companies in various logistics and support services,' he said. 'I am delighted that our SMEs find it useful. If demand continues at this rate, we will consider building another facility.'

JTC invested some $12 million to build the seven-storey building for smaller players supporting the 'queen bees' in SAP.

One local player, MAJ Aviation, last week opened a $10 million hangar in SAP, featuring an innovative aircraft parking system, said to be a world first. Its centrepiece is a two-level rotating carousel that can park 14 light aircraft using the space for just seven in a conventional hangar.

Meanwhile, aerospace components supplier Meggit Aerospace has become the first company to take up one of the eight free-standing factories in SAP, built at a cost of some $35 million.

The development of the 320-hectare SAP will proceed to its third phase in the second half of this year. The first two phases saw the initial redevelopment of almost two-thirds of the park, the building of transport infrastructure and the lengthening of the runway to 1,836 metres, enabling it to cater to B757 jets.

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http://www.bombardier.com/en/corporate/m...0d801e6e22


Press Releases
Bombardier Establishing OEM-Owned Service Centre in Singapore for Business Aircraft
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February 15, 2012 — Singapore
Aerospace
Bombardier’s 10th wholly owned aircraft maintenance facility worldwide and second service centre outside of North America
Bombardier Aerospace today announced that it will open a full-scale company-owned and operated service centre in Singapore in 2013. The new service centre will form the cornerstone of Bombardier’s comprehensive customer services offering in the Asia-Pacific region and ensure that Bombardier Business Aircraft customers have even broader access to Original Equipment Manufacturer (OEM)-backed service.
The new facility will be the second service centre operated by Bombardier outside of North America, bringing the total number to 10 worldwide. It will be capable of performing a variety of light to heavy maintenance tasks on all Bombardier Learjet, Challenger and Global aircraft.
Bombardier’s Singapore Regional Support Office (RSO), opened in late 2011, will work in conjunction with the new service centre location as well as the company's current Singapore parts depot. Together with other facilities based in the Asia-Pacific region, Bombardier will create a full-service customer support hub in the region to complement existing regional networks in North America and Europe.
“We want to ensure our customers in the Asia-Pacific region have access to the full range of customer support and services in their own time zone and in their own region. It is a reflection of our commitment to current and future operators that no matter where they fly, they will have access to our OEM-backed support,” said Éric Martel, President, Bombardier Customer Services & Specialized and Amphibious Aircraft.
“By 2030, there could be more than 1,100 business jets in service in the Asia-Pacific region, and we are ready and committed to support our existing and future customers, which we expect will make up a large portion of that fleet,” he added.
Bombardier currently operates 10 dedicated support facilities in the Asia-Pacific region, including five parts depots, as well as RSOs in Tokyo, Japan and Shanghai, China for commercial aircraft; in Singapore and Hong Kong for business aircraft; and in Sydney, Australia for both business and commercial aircraft customers. This network currently supports an installed Bombardier Business Aircraft fleet that had reached a total of 170 aircraft in 2011.
In addition to the Company’s wholly owned service centres, parts depots and regional support offices, Bombardier’s business and commercial aircraft customers have access to a broad network of 56 Authorized Service Facilities and Aircraft-On-Ground Line Maintenance Facilities in 27 countries.
About Bombardier
A world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services, Bombardier Inc. is a global corporation headquartered in Canada. Its revenues for the fiscal year ended January 31, 2011, were $17.9 billion, and its shares are traded on the Toronto Stock Exchange (BBD). Bombardier is listed as an index component to the Dow Jones Sustainability World and North America indexes. News and information are available at www.bombardier.com or follow us on Twitter @Bombardier.
Notes to Editors
• Image 1: Artist conception of the planned Bombardier facility to be located at Seletar airport in Singapore. The new service centre will support all Bombardier Learjet,Challenger and Global aircraft.
• Image 2: From left to right: Andy Nureddin, Vice President, Customer Services and Support, Bombardier Business Aircraft; Éric Martel, President, Bombardier Customer Services & Specialized and Amphibious Aircraft; Yeoh Keat Chuan, Assistant Managing Director, Singapore Economic Development Board; and Manohar Khiatani, Chief Executive Officer, JTC Corporation.
• Follow @Bombardier_Aero on Twitter to receive the latest news and updates from Bombardier Aerospace.
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Bombardier, Challenger, Global and Learjet are trademarks of Bombardier Inc. or its subsidiaries
For Information
Christina Peikert
Bombardier Aerospace
+1 514 465 3266
Email
www.bombardier.com