Broker: OCBC Investment Research
Date of Report: 25 June 2025

Boustead Singapore: Unlocking Value in Diversified Engineering and Technology – Why This Stock Is Poised for a Rerating

Overview: A Premier Singapore Engineering & Technology Group

Boustead Singapore Limited stands as one of the oldest and most progressive engineering and technology groups in Singapore. With a rich heritage dating back to 1828, Boustead operates across four primary segments: Energy Engineering, Real Estate, Geospatial Technology, and Healthcare. The group’s diversified structure provides investors with exposure to multiple secular growth trends, including sustainability, smart cities, IoT, and Asia Pacific’s aging demographics.

Key Investment Highlights

• Favourable Long-Term Growth: Boustead’s diversified businesses are aligned with high-growth global trends such as climate action, smart infrastructure, and healthcare for aging populations.
• Value-Unlocking Catalysts: Potential corporate actions, including asset injections into a REIT and strategic reviews of logistics and industrial real estate holdings, could unlock significant shareholder value.
• Strong Financial Position: A robust net cash position enables Boustead to pursue investments and acquisitions, further driving growth.
• Potential Beneficiary of Market Revitalization: Boustead could benefit from the Monetary Authority of Singapore’s SGD5 billion market injection targeting small/mid-cap stocks via selected fund managers later this year.
• Attractive Dividend Yield: FY25 dividend yield stands at an appealing 5.5%.

Recent Share Price Performance

Boustead’s share price has surged 20.2% since the last update on 29 May 2025, closing at SGD 1.37 on 24 June 2025. This upward momentum has been supported by:

• Strong FY25 results, driven by margin expansion and an exceptional SGD29 million gain from the transfer of fund and property management businesses to Unified Industrial (UIB).
• Ongoing and potential corporate actions aimed at unlocking shareholder value.

Financial Performance & Key Ratios

Valuation and Rating

OCBC Investment Research has increased its fair value estimate from SGD 1.46 to SGD 1.63, reiterating a BUY rating. This adjustment reflects a reduced conglomerate discount from 15% to 5%, indicating growing confidence in Boustead’s business quality and upside potential.

Business Segments: Growth Drivers and Financial Breakdown

Energy Engineering

– Pioneers in critical process technologies and emissions reduction for oil & gas, petrochemical, and energy sectors. – FY26E after-tax profit: SGD 22.9 million. – SOTP valuation multiple: 7.0x, segment value SGD 160 million (19% of SOTP).

Geospatial Technology

– Exclusive distributor of Esri ArcGIS technology in Asia Pacific. – Captures the accelerating demand for smart city infrastructure and IoT. – FY26E after-tax profit: SGD 40.7 million. – SOTP valuation multiple: 8.0x, segment value SGD 287.4 million (34% of SOTP).

Real Estate

– Provides innovative, eco-sustainable, and future-ready developments through Boustead Projects Limited. – Value assigned at a 50% discount to NAV, segment value SGD 213.2 million (25% of SOTP).

Healthcare Technology

– Focused on age-related chronic diseases and rehabilitative care, especially in Asia Pacific. – Segment currently written-off with zero value contribution to SOTP.

Net Cash

– As of 31 March 2026: SGD 182 million (22% of SOTP), computed as cash minus lease liabilities, contract liabilities, borrowings, and pension liabilities.

Total SOTP Valuation (after 5% discount):

SGD 842.6 million

Order Backlog and Revenue Mix

– Total engineering order backlog as of 31 March 2025: SGD 349 million (Energy Engineering: SGD 126 million; Real Estate: SGD 223 million). – FY25 revenue by segment: Energy Engineering (30%), Real Estate (25%), Geospatial (42%), Healthcare (2%). – Real Estate dominates order backlog (64%), with Energy Engineering at 36%.

ESG Commitments: Environmental, Social, and Governance Initiatives

• Environmental Stewardship: Boustead’s eco-sustainable solutions—such as heat recovery systems—reduce energy demand and improve client operational efficiency. Boustead Projects holds ISO 14001:2015 certification for Environmental Management Systems.
• Social Responsibility: Boustead promotes a positive work environment, focusing on health, safety, and career development. Over the last 15 years, more than SGD 4 million has been donated to educational and cultural causes. The company is working to enhance gender diversity and reduce accident frequency rates.
• Corporate Governance: Boustead enforces a strong Code of Conduct covering anti-bribery, fair dealing, confidentiality, privacy, and whistleblowing. Employees and external parties have access to a whistleblowing mechanism and data protection committee.

Potential Catalysts for Re-Rating

• Continued strong contract/order win momentum.
• Accretive acquisitions, particularly to scale the Healthcare division.
• Spin-off of real estate assets into a REIT structure.
• Further value-unlocking corporate actions.

Key Risks to Monitor

• Cost overruns could pressure profit margins.
• Losses in Healthcare division could widen.
• Macroeconomic weakness may impact fiscal and corporate spending.
• Global geopolitical tensions and supply chain disruptions could affect order book wins.
• Gross profit margin expansion from 30% in FY24 to 44% in FY25 may not be sustainable in the future.

Boustead Singapore: Historical Financial Performance

Peer Comparisons: Valuation Multiples

Boustead is benchmarked against international peers such as Takuma Co Ltd (6013.T), Analogue Holdings Ltd (1977.HK), and Akastor ASA (AKAST.OL). Key valuation metrics for FY26E include:

• Takuma Co Ltd: P/E 14.0x, P/B 1.4x, EV/EBITDA 8.4x, Dividend Yield 3.6%, ROE 9.6%
• Akastor ASA: P/E 61.8x, P/B 0.7x, EV/EBITDA 85.4x, Dividend Yield 0%, ROE 1.1%
• Analogue Holdings: Data not available

Company Profile

Established in 1828, Boustead Singapore is listed on the SGX Mainboard with a global network spanning Asia, Australia, Europe, Africa, and the Americas. The company has completed projects in 93 countries and territories. As of 24 June 2025, Boustead’s market capitalization stands at SGD 0.7 billion, with a free float of 53% and top shareholder Wong Fong Fui holding 41.9%.

Conclusion: Boustead Singapore’s Road Ahead

Boustead Singapore’s diversified business model, strong financials, and alignment with major global trends position it as a top contender for investors seeking growth, stability, and potential value-unlocking catalysts. With a robust order book, attractive dividend yield, and anticipated market catalysts, Boustead is set for further rerating as more value is unlocked for shareholders. Investors should monitor upcoming strategic reviews, corporate actions, and sectoral performance for continued upside.

Disclaimer

The views presented are for informational purposes and not an investment recommendation. Please consult your financial advisor before making investment decisions.