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Stock Picks
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Agenda
1. Boustead Singapore
2. Overseas Education
3. Singapore Post
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Using ShareXplorer
1. Boustead Singapore (S$1.855)
Market capitalisation = S$970mDividend yield = 2.7%2014 EPS = 14.4 S cents2014 PE = 12.7x
![Page 4: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/4.jpg)
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Investment Highlights1. Boustead Singapore (S$1.855)
• Business model requires low capital intensity• Scaleability is an advantage and an opportunity• M&A opportunities in energy and real estate
Source: Boustead
Four Business Segments Group Business Model
Source: Boustead
![Page 5: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/5.jpg)
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Investment Highlights1. Boustead Singapore (S$1.855)
Industrial Real Estate Solutions• Competitive advantage in its
end-to-end capabilities• Top-line visibility on the
back of its S$202m orderbook and growing recurring stream
Source: Boustead, UOB Kay Hian
221.0 214.0
142.0
246.0
158.0 154.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
FY09 FY10 FY11 FY12 FY13 1HFY140.0
5.0
10.0
15.0
20.0
FY08 FY09 FY10 FY11 FY12 FY13 1HFY14Source: Boustead, UOB Kay Hian
Turnkey Engineering Approach
Design-Build Contracts Secured (S$m)
Rental Income (S$m)
![Page 6: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/6.jpg)
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Investment Highlights
1. Boustead Singapore (S$1.855)Industrial Real Estate Solutions• Building an industrial leasehold portfolio for future unlocking• Iskandar foray adds to regional presence
Source: Boustead
Industrial Leasehold Portfolio Nusajaya Iskandar Map
![Page 7: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/7.jpg)
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Investment Highlights
1. Boustead Singapore (S$1.855)Energy-Related Engineering• Alternative proxy to global
O&G upcycle• Energy pre-tax margin has
bottomed; potential recovery going forward
Source: Boustead, UOB Kay Hian Source: Boustead, UOB Kay Hian
Cylindrical Heater System (UK)
Energy Contracts Secured (S$m)
Energy PBT Margin123.0
67.0
111.0
143.0 144.0145.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
FY09 FY10 FY11 FY12 FY13 1HFY14
0%2%4%6%8%
10%12%14%16%18%
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
![Page 8: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/8.jpg)
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Investment Highlights
1. Boustead Singapore (S$1.855)Geo-Spatial Technology• Market dominance to
support sustainable revenue growth
• Favourable cost structure and recurring stream lend to good margins and cash flow
Source: Boustead, UOB Kay HianSource: Boustead
Esri’s Geographic Information System (GIS)
Geo-Spatial Revenue and PBT (S$m)
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
![Page 9: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/9.jpg)
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Investment Highlights
1. Boustead Singapore (S$1.855)Water and Wastewater Engineering• Breaking even as restructuring ends
Source: Boustead
Water Plants - Singapore
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Valuation & Financials1. Boustead Singapore (S$1.855)
• Target price S$1.94 (+4.6% upside)• SOTP valuation model with implied FY15F PE 17.5x• 25% of market cap is net cash• Potential catalysts: contract wins, turnaround in water division,
earnings-accretive M&As, REIT listing• Key risks: cyclical risk, foreign exchange risk, execution risk,
shortage in skilled talent, political risk in Libya
Source: Boustead, UOB Kay Hian
4.0
5.5
7.0
5.0
7.0
5.0 5.0 5.0
0.01.0
2.03.0
4.05.0
6.07.0
8.0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Dividend Per Share (S cents)
![Page 11: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/11.jpg)
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Valuation & Financials
1. Boustead Singapore (S$1.855)
16.8 17.3 18.1 29.3 23.0 ROE (%)71.6 87.2 128.5 81.2 81.5 Interest cover (x)
(62.0)(47.6)(72.1)(62.8)(67.0)Net gearing (%)11.2 10.9 11.0 15.9 13.6 PATMI margin (%)2.7 2.7 2.7 3.8 2.7 Dividend yield (%)8.7 10.6 10.2 7.6 10.7 EV/EBITDA (x)2.4 2.7 2.9 3.0 3.6 P/BV (x)
15.7 16.8 17.4 11.6 17.0 P/E (x)11.9 11.1 10.7 16.1 11.0 Adj. EPS (S cent)62.558.356.281.455.6Adj. net profit65.761.358.784.558.4Net profit76.569.367.595.068.9EBIT86.878.574.8100.372.8EBITDA
560.6533.6512.4513.2408.7Net turnoverFY16FFY15FFY14FFY13FY12Year to 31 Mar (S$m)
Projections
Source: Boustead, UOB Kay Hian
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Chart Genie1. Boustead Singapore (S$1.855)
Last Price: S$1.855Support: S$1.79Resistance: -
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Using ShareXplorer
2. Overseas Education (S$0.815)
Market capitalisation = S$339mDividend yield = 3.4%2014 EPS = 5.7 S cents2014 PE = 14.3x
![Page 14: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/14.jpg)
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Investment Highlights2. Overseas Education (S$0.815)
• New campus to lift capacity constraint by at least 22% and allowfor more competitive pricing
• New campus on track to be completed by school year commencing Aug 15
Site Visit (Nov 13)
Source: Overseas Education, UOB Kay Hian
![Page 15: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/15.jpg)
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Investment Highlights
2. Overseas Education (S$0.815)
• Stable business with long-term customers• Cash-generating business; no debt but fundraising in 2014• Average tuition fee increase of 8.5% for school year Aug 13 to
drive revenue growth in 1H14
Source: Overseas Education, UOB Kay Hian
History Of Student Enrolment Net Cash And Free Cash Flow (S$m)
0
5001,000
1,5002,000
2,500
3,0003,500
4,000
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
-100.0
-50.0
0.0
50.0
100.0
150.0
2012 2013F 2014F 2015F 2016F 2017F 2018F
Net Cash Free Cash Flow
Source: Overseas Education, UOB Kay Hian
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Valuation & Financials
2. Overseas Education (S$0.815)
• BUY recommendation, Target price S$0.98 (+20.2% upside)• 3-stage DCF valuation model with implied 2014F PE 16.5x• Peer-average FY14 PE is 22x• Potential catalysts: efficient staff-cost management, higher-than-
estimated student enrolment and capacity increase at new campus
• Key risks: inflationary pressure on personnel expense, executionrisk, lower-than-expected student enrolment due to change in campus location
![Page 17: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/17.jpg)
17
Valuation & Financials
2. Overseas Education (S$0.815)
Source: Overseas Education, UOB Kay Hian
Projections
18.8 17.2 16.1 16.0 33.8 ROE (%)17.2 8.5 12.3 n.an.aInterest cover (x)
1.6%18.0%-27.9%n.an.aNet gearing (%)24.8 22.5 21.4 22.0 21.5 PATMI margin (%)5.2 4.3 3.6 3.4 3.4 Dividend yield (%)5.8 8.4 8.0 6.9 8.5 EV/EBITDA (x)1.7 1.9 2.1 2.3 5.0 P/BV (x)9.7 11.7 13.7 14.3 16.4 P/E (x)8.4 7.0 5.9 5.7 5.0 Adj. EPS (S cent)8.4 7.0 5.9 5.7 5.0 EPS (S cent)
35.128.924.722.620.7Adj. net profit35.128.924.722.620.7Net profit44.639.232.126.924.2EBIT59.344.036.830.928.6EBITDA
141.3128.3115.4102.796.2Net turnover2016F2015F2014F20132012Year to 31 Dec (S$m)
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Chart Genie2. Overseas Education (S$0.815)
Last Price: S$0.815Support: S$0.80Resistance: S$0.84
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Using ShareXplorer
3. Singapore Post (S$1.32)
Market capitalisation = S$2,530mDividend yield = 4.8%2014 EPS = 7.4 S cents2014 PE = 17.7x
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Investment Highlights
3. Singapore Post (S$1.32)
• No longer your traditional mailman
Source: SingPost
![Page 21: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/21.jpg)
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Investment Highlights
3. Singapore Post (S$1.32)
• Piling on regional logistics; 15% ROI for M&As
Source: SingPost
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Investment Highlights
3. Singapore Post (S$1.32)
• Logistics revenue to grow at a 3-year CAGR of 23%
0.050.0
100.0150.0200.0250.0300.0350.0400.0450.0500.0
FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15FY16
Source: SingPost, UOB Kay Hian
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Investment Highlights
3. Singapore Post (S$1.32)
• Frontrunner in end-to-end e-commerce solutions
Source: SingPost
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Investment Highlights
3. Singapore Post (S$1.32)
• Frontrunner in end-to-end e-commerce solutions
Source: SingPost
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Investment Highlights3. Singapore Post (S$1.32)
• Dominance in Singapore mail…
Source: SingPost, UOB Kay Hian
0.0
100.0
200.0
300.0
400.0
500.0
600.0FY
00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
Revenue from Mail Division (S$m)
![Page 26: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/26.jpg)
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Investment Highlights
3. Singapore Post (S$1.32)
• …to support base annual dividend of 5 S cents
Source: SingPost, UOB Kay Hian
Free Cash Flow (S$m)
0.0
50.0
100.0
150.0
200.0
250.0
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
Dividend (cents per share)
Source: SingPost
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Investment Highlights
3. Singapore Post (S$1.32)
• Singapore Post Center – Tall in value
Source: ICA
416.8Less: Net Book Value, Fees428.6Net gain0.22Per share (S$)
845.38Total159.42Retail (10%)548.00Office (45%)137.96Industrial (45%)
Valuation(S$m)
Source: SingPost, UOB Kay Hian
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Valuation & Financials
3. Singapore Post (S$1.32)
• BUY recommendation, Target price S$1.50 (+13.6% upside)• 3-stage DCF valuation model with implied FY15F PE of 20.8x• FY14-16F ROCE of 39%• Potential catalysts: higher contributions from its new subsidiaries,
stronger organic business growth from e-commerce activities• Key risks: e-commerce failing to counteract the decline in
traditional mail, competition, labour cost pressures, economic downturn and externalities
![Page 29: Stock Picks Presentation 2014-0319 (new template) · 3 Using ShareXplorer 1. Boustead Singapore (S$1.855) Market capitalisation = S$970m Dividend yield = 2.7% 2014 EPS = 14.4 S cents](https://reader034.vdocument.in/reader034/viewer/2022050603/5faa2ed6fe684d3f0c47d0cc/html5/thumbnails/29.jpg)
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Valuation & Financials
3. Singapore Post (S$1.32)Projections
Source: SingPost, UOB Kay Hian
40.7 40.5 39.3 38.4 44.0 ROE (%)28.1 26.4 22.4 12.8 14.1 Interest cover (x)(0.4)(0.4)(0.3)(0.3)(0.4)Net gearing (%)17.0 17.3 17.5 20.7 24.5 PATMI margin (%)4.8 4.8 4.8 4.8 4.8 Dividend yield (%)9.5 10.4 11.1 11.1 11.0 EV/EBITDA (x)6.9 7.4 7.7 7.8 7.8 P/BV (x)
16.9 18.2 19.5 20.4 17.7 P/E (x)7.7 7.2 6.7 6.4 7.4 Adj. EPS (S cent)7.7 7.2 6.7 6.4 7.4 EPS (S cent)
147.9137.7128.1121.6140.8Adj. net profit165.2154.8144.9136.5142.0Net profit203.5191.0180.1178.5186.3EBIT245.7229.4214.7214.8216.5EBITDA957.5883.4817.0658.8578.5Net turnover
FY16FFY15FFY14FFY13FY12Year to 31 Mar (S$m)
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Chart Genie3. Singapore Post (S$1.32)
Last Price: S$1.32Support: S$1.285Resistance: S$1.33
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Thank You