stock picks presentation 2014-0319 (new template) · 3 using sharexplorer 1. boustead singapore...

Stock Picks

2

Agenda

1. Boustead Singapore

2. Overseas Education

3. Singapore Post

3

Using ShareXplorer

1. Boustead Singapore (S$1.855)

Market capitalisation = S$970mDividend yield = 2.7%2014 EPS = 14.4 S cents2014 PE = 12.7x

4

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

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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)

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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

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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

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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

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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


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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


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


Dividend Per Share (S cents)

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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


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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

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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

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• 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


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


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• 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

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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

19

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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• No longer your traditional mailman

Source: SingPost

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• Piling on regional logistics; 15% ROI for M&As

Source: SingPost

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• 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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• Frontrunner in end-to-end e-commerce solutions

Source: SingPost

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• 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…


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Revenue from Mail Division (S$m)

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• …to support base annual dividend of 5 S cents


Free Cash Flow (S$m)

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Dividend (cents per share)

Source: SingPost

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• 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)


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• 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

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3. Singapore Post (S$1.32)Projections


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

Thank You

stock picks presentation 2014-0319 (new template) · 3 using sharexplorer 1. boustead singapore...

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