It has not been an easy year for Boustead Singapore Limited (SGX: F9D), or BSL.
The conglomerate was mired in a controversy regarding its decision to privatise its real estate arm, Boustead Projects (BPL), in February last year.
The original offer price of S$0.90 per share for BPL was later raised to S$0.95 but was deemed “not fair but reasonable” by PrimePartners.
In November last year, BSL proposed an unconditional exit offer of S$1.18 for each share of BPL which was 23.6% higher than the S$0.955 originally tabled.
With the privatisation done, BSL recently released its fiscal 2024 (FY2024) earnings for the fiscal year ending 31 March 2024.
Its share price has also hit a 52-week high of S$1.04 recently, up 21% year to date.
We dig deeper to determine if the conglomerate can continue to perform well.
A sparkling set of earnings
BSL pulled off a strong set of results for FY2024.
Revenue jumped 37% year on year to S$767.6 million, buoyed by year-on-year revenue increases across three out of its four divisions.
Gross profit improved by 44% year on year to S$226.7 million.
Net profit came in at S$64.2 million, up 42% from the previous fiscal year.
Excluding one-off items and exceptional expenses, BSL’s net profit would have doubled year on year from S$31.5 million to S$63.3 million.
The better performance was attributed to increased contributions from BPL as it is now a 99.5%-owned subsidiary, along with overall better profit contributions from BSL’s Energy Engineering, Real Estate, and Geospatial divisions.
On the cash flow side, BSL also did well, generating a positive free cash flow of S$91.8 million for FY2024, 24% higher than the S$74 million churned out in FY2023.
A surge in dividends
In line with the strong profits, BSL proposed a final dividend of S$0.04 per share with the option for it to be taken in cash and/or scrip.
Coupled with the interim dividend of S$0.015, FY2024’s total dividend came up to S$0.055, a 37.5% increase from the S$0.04 paid out in FY2023.
Two divisions facing headwinds
Diving into each division’s performance, Real Estate continues to be the main contributor to BSL’s revenue, taking up 48% of the total.
It was also the group’s largest revenue contributor for the 17th consecutive year.
The division saw a 30% year-on-year rise in revenue to S$369.5 million for FY2024 because of significant revenue recognition from a sizable backlog carried forward from FY2023.
However, the Real Estate division saw its operating profit fall by 29% year on year to S$17.5 million.
Management also commented on tough business conditions in FY2024 that severely impacted business development activities.
The result is the division scoring just a few small engineering and construction (E&C) contracts and one major variation order.
Over at BSL’s Energy Engineering division, revenue soared 78% year on year to S$174.4 million, also supported by a significant backlog from FY2023.
The second half of fiscal 2024 (2H FY2024), however, saw heightened geopolitical concerns along with more conflicts and wars, thereby dampening the division’s activity level.
A record operating profit of S$31.2 million was generated by Energy Engineering, up more than threefold year on year.
Geospatial coasting to a new high
The geospatial division was the star division for BSL with a 27% year-on-year improvement in revenue to S$212.7 million and was the first time the division had surpassed the S$200 million revenue mark.
The better performance came from growth across all markets and was boosted by a landmark enterprise agreement in Australia.
Operating profit for the division also hit a new record of S$40.5 million, up 26% year on year.
In addition, the Geospatial division’s deferred services backlog also stood at a record high of S$129 million.
Cautious optimism
Management expressed cautious optimism for FY2025 because of increased geopolitical tensions, high inflation, an overall higher level of interest rates, and ongoing conflicts.
A total of S$159 million in new contracts was secured in FY2024, the lowest level in nearly two decades.
At the beginning of FY2025, BSL secured another S$36 million in additional new engineering contracts.
Its order book backlog stood at S$247 million as of 31 March 2024.
Although contract flow has slowed considerably, the group maintains healthy enquiry pipelines for both its Energy Engineering and Geospatial divisions.
Overall, BSL expects to deliver satisfactory results in FY2025.
Get Smart: Rebuilding its order book
BSL performed well in FY2024 as it recognised higher revenue from its high order backlog.
FY2025, however, seems more challenging as contract flow slowed considerably.
Nonetheless, BSL should report a decent set of earnings as its Geospatial division is performing well, bolstered by a strong balance sheet flush with cash and minimal debt.
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Disclosure: Royston Yang owns shares of Boustead Singapore.
