Broker: OCBC Investment Research
Date of Report: 29 May 2025
Boustead Singapore: Resilient Profit Growth and Dividend Upside Amid Macroeconomic Uncertainty
Overview: A Legacy of Engineering Excellence and Strategic Diversification
Boustead Singapore Limited, one of the oldest continuous businesses in Singapore, stands as a progressive engineering and technology powerhouse. With a diversified portfolio spanning Energy Engineering, Real Estate Solutions, Geospatial Technology, and Healthcare, Boustead is strategically positioned to benefit from long-term trends like climate action, smart cities, Internet of Things (IoT), and Asia Pacific’s aging population. The company’s robust net cash position and healthy balance sheet offer ample room for further investments and value-unlocking acquisitions.
Financial Highlights: Cost Management Drives Profit Growth Despite Revenue Decline
- FY25 revenue fell 31% to SGD527.1 million, primarily due to a more than 50% drop in the Real Estate Solutions Division and a 9% decrease in Energy Engineering revenue. However, Geospatial Technology revenue grew 4% to record levels.
- Gross profit rose 3% to SGD233.3 million, with margins expanding from 30% in FY24 to a robust 44% in FY25, attributed to effective cost management.
- Net profit surged 48% to SGD95 million, boosted by an exceptional SGD29 million gain from the transfer of fund and property management businesses to Unified Industrial. Excluding exceptional items and impairments, underlying net profit grew 8%.
Key Financial Metrics (SGD million unless stated otherwise)
| FY25 |
FY26E |
FY27E |
| Revenue: 527.1 |
586.9 |
646.8 |
| Gross Profit: 233.3 |
184.1 |
200.3 |
| PATMI: 95.0 |
80.4 |
88.7 |
| EPS (S cents): 19.6 |
16.6 |
18.3 |
| DPS (S cents): 7.5 |
6.6 |
7.3 |
Dividend Yield: Attractive Payouts Rewarding Shareholders
- Boustead has proposed a final dividend of 4 Singapore cents per share and a special dividend of 2 Singapore cents per share for FY25, bringing total dividends to 7.5 Singapore cents per share (up from 5.5 in FY24).
- This equates to a generous 7.2% dividend yield, based on the pre-results closing price of SGD1.04.
Order Book Recovery and Forward Guidance
- FY25 saw the company secure SGD337 million in new orders, replenishing the backlog to SGD349 million by 31 March 2025 (from SGD247 million a year prior). The split: SGD126 million in Energy Engineering and SGD223 million in Real Estate Solutions.
- Boustead’s management remains cautious, citing ongoing geopolitical tensions and global supply chain disruptions that could weigh on business sentiment in the near term. However, continued cost discipline and capital efficiency underpin a resilient outlook.
- Fair value estimate has been raised to SGD1.46, reflecting the improved order backlog and profit trajectory.
ESG Commitment: Environmental Leadership and Corporate Responsibility
- Boustead acts as an ESG enabler. Its energy solutions, such as heat recovery systems, reduce plant energy demand and can double gas turbine operational efficiency. Boustead Projects, its largest subsidiary, holds ISO 14001:2015 certification for environmental management.
- The company is committed to workplace health, safety, career development, and grievance management but could further improve gender diversity and accident frequency rates.
- Boustead has donated over SGD4 million to education, non-profits, and the arts over 15 years.
- Governance is robust, with policies on anti-bribery, fair competition, data privacy, whistleblowing, and more.
Business Segments: Performance and Prospects
Energy Engineering
- Provides critical process technologies and emission reduction for oil & gas, petrochemical, and broader energy sectors.
- Order backlog: SGD126 million as of 31 March 2025.
- FY25 revenue fell due to a lower opening order book but remains a key pillar, especially as sustainability trends grow.
Real Estate Solutions
- Develops innovative, eco-sustainable properties via Boustead Projects Limited.
- Order backlog: SGD223 million as of 31 March 2025.
- Revenue declined significantly in FY25, but the pipeline is being rebuilt. A potential spin-off into a REIT could serve as a catalyst.
Geospatial Technology
- Exclusive distributor of Esri ArcGIS and GIS solutions in Asia Pacific.
- FY25 revenue up 4% to record levels; division contributed 42% of FY24 revenue.
- Exposure to secular trends like smart cities, IoT, and digital transformation.
Healthcare
- Focuses on medical solutions for age-related diseases and mobility, with a special emphasis on rehabilitative care and sports science in Asia Pacific.
- Represents a smaller (2%) but strategically significant segment. Risks include widening losses as the division scales.
Key Financials: Historical Performance (SGD million unless stated)
| FY21 |
FY22 |
FY23 |
FY24 |
FY25 |
| Revenue: 685.7 |
631.8 |
561.6 |
767.6 |
527.1 |
| Gross Profit: 173.6 |
144.8 |
157.0 |
226.7 |
233.3 |
| Net Profit: 113.1 |
30.6 |
45.3 |
64.2 |
95.0 |
| Basic EPS (S\$): 0.2 |
0.1 |
0.1 |
0.1 |
0.2 |
| Dividend (S cents): 3.0 |
3.0 |
4.0 |
5.5 |
7.5 |
Financial Ratios and Credit Metrics
- Return on Equity: 17.49% (FY25, up from 13.40% in FY24)
- Net Income Margin: 18.03% (FY25, up from 8.36% in FY24)
- Net Debt/Equity: -0.50 (net cash position)
- Dividend Payout Ratio: 28.11% (FY25)
Sum-of-the-Parts Valuation: Segment Contributions
| Division |
FY26E Profit After Tax (SGD’m) |
P/E Multiple (x) |
Value (SGD’m) |
% of SOTP |
Comment |
| Energy Engineering |
22.9 |
7.0 |
160.0 |
19% |
|
| Geospatial Technology |
40.7 |
8.0 |
287.4 |
34% |
|
| Real Estate |
|
213.2 |
25% |
50% discount to NAV |
| Healthcare Technology |
0 |
|
0 |
0% |
Written-off |
| Net cash (as of 31 Mar 2026) |
|
182.0 |
22% |
Net of liabilities |
| Discount |
|
15% |
|
| Total Valuation |
842.6 |
|
Peer Comparison: International Benchmarks
| Company |
P/E FY26E |
P/E FY27E |
P/B FY26E |
P/B FY27E |
EV/EBITDA FY26E |
EV/EBITDA FY27E |
Dividend Yield FY26E (%) |
Dividend Yield FY27E (%) |
ROE FY26E (%) |
ROE FY27E (%) |
| Takuma Co Ltd (6013.T) |
14.4 |
12.9 |
1.4 |
1.3 |
8.7 |
8.2 |
3.4 |
3.8 |
9.6 |
10.2 |
| Analogue Holdings Ltd (1977.HK) |
N.A. |
| Akastor ASA (AKAST.OL) |
59.3 |
23.7 |
0.7 |
0.7 |
82.0 |
61.2 |
0.0 |
0.0 |
1.1 |
3.0 |
Potential Catalysts: Upside Triggers for Investors
- Continued strong contract/order wins
- Accretive acquisitions, particularly in Healthcare
- Potential spin-off of real estate assets into a REIT
Investment Risks to Monitor
- Cost overruns that could pressure profit margins
- Widening losses in the Healthcare Division
- Macroeconomic weakness impacting fiscal and corporate spending
Company Profile: Boustead Singapore at a Glance
- Founded: 1828
- Listed on: SGX Mainboard
- Global reach: Projects in 93 countries across Asia, Australia, Europe, Africa, and the Americas
- Business segments: Energy Engineering, Real Estate, Geospatial, Healthcare
- FY24 Revenue Breakdown: Energy Engineering (30%), Real Estate (25%), Geospatial (42%), Healthcare (2%)
- Order Backlog (as of 31 Mar 2025): Energy Engineering (36%), Real Estate (64%)
Summary: Resilient Performance with Long-Term Upside
Boustead Singapore has demonstrated remarkable resilience amid challenging macroeconomic conditions, leveraging disciplined cost management and strategic diversification to drive profit growth and deliver attractive dividends. With a healthy order book, strong cash position, and exposure to transformative trends in engineering and technology, Boustead remains well-placed for long-term value creation. Investors can look forward to multiple catalysts, from potential accretive acquisitions to the possible spin-off of real estate assets, while remaining mindful of risks from margin pressures and external uncertainties.
