Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

Boustead Singapore Limited / Equity Bottom-Up

These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.<h2>Boustead Singapore Ltd</h2>
Bouncing back to glory
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■ Boustead is an engineering company focusing on industrial real estate and energy; it also holds exclusive distributorship of Esri’s GIS for 8 countries.
■ The group has a bright overall outlook, with order book backlog of both its real estate and energy segments at a 5-year high as of end-Jun 2019.
■ Meanwhile, we believe its geospatial technology business continues to enjoy strong growth potential, riding on the “smart city” wave.
■ Initiate coverage with an Add rating and a TP of S$1.00. Potential REIT launch and further order wins in energy segment are potential catalysts.
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Initiate coverage with Add rating and TP of S$1.00 We initiate coverage with an Add rating and TP of S$1.00, based on a 20% discount to our SOP valuation of S$1.25/share. Boustead is firing on all cylinders, with its real estate and energy-related engineering order book backlog at a 5-year high, while its geospatial segment continues to expand steadily. Valuation is attractive, in our view, at 6.8x FY3/20F ex-cash P/E while providing a stable dividend yield of 4.1%.
Energy segment making a major comeback Boustead’s energy-related engineering segment has secured S$161m worth of contracts YTD in FY20F, trumping the S$89m it secured in FY19. Segment order book backlog stood at S$202m as of end-Jun 2019, a 5-year high. We believe Boustead is an alternative proxy to the global oil &amp; gas industry recovery trend, as its prequalification status for a global list of engineering, procurement and construction (EPC) contractors could allow the group to capitalise on oil majors’ higher capex in the years ahead.
Riding on the “smart city” wave Boustead’s geospatial segment is riding on macro tailwinds, with the world trending towards an era ushered by big data, internet of things and smart cities. Rising urbanisation and development of smart cities trigger the need to have more advanced global positioning systems and navigation platforms to capture location-based data; the ‘smart government’ concept is also driving government agencies to invest significantly into geographic information system (GIS) solutions to translate smart government principles into tangible transformative actions. Stripping out FX impact, we forecast Boustead’s geospatial segment to record 7% revenue CAGR over the next 3 years.
Possible REIT launch in CY20F could be a catalyst We estimate existing projects under development would bring Boustead Projects’ (Boustead’s 52.8% owned subsidiary, BOCJ SP, Add, TP: S$1.24) leasehold portfolio asset base to S$1bn by next year, putting it on track for an eventual REIT listing. With the help of higher occupancy rate after the completion of the ALICE asset stabilisation, we think a REIT listing could materialise as early as CY20F. We think this could unlock significant value, as the investment properties are accounted for at cost less depreciation. A special dividend is also a possibility after a successful REIT listing, in our view.

These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.Boustead Singapore Ltd
Bouncing back to glory

■ Boustead is an engineering company focusing on industrial real estate and energy; it also holds exclusive distributorship of Esri’s GIS for 8 countries.
■ The group has a bright overall outlook, with order book backlog of both its real estate and energy segments at a 5-year high as of end-Jun 2019.
■ Meanwhile, we believe its geospatial technology business continues to enjoy strong growth potential, riding on the “smart city” wave.
■ Initiate coverage with an Add rating and a TP of S$1.00. Potential REIT launch and further order wins in energy segment are potential catalysts.

Initiate coverage with Add rating and TP of S$1.00 We initiate coverage with an Add rating and TP of S$1.00, based on a 20% discount to our SOP valuation of S$1.25/share. Boustead is firing on all cylinders, with its real estate and energy-related engineering order book backlog at a 5-year high, while its geospatial segment continues to expand steadily. Valuation is attractive, in our view, at 6.8x FY3/20F ex-cash P/E while providing a stable dividend yield of 4.1%.
Energy segment making a major comeback Boustead’s energy-related engineering segment has secured S$161m worth of contracts YTD in FY20F, trumping the S$89m it secured in FY19. Segment order book backlog stood at S$202m as of end-Jun 2019, a 5-year high. We believe Boustead is an alternative proxy to the global oil &amp; gas industry recovery trend, as its prequalification status for a global list of engineering, procurement and construction (EPC) contractors could allow the group to capitalise on oil majors’ higher capex in the years ahead.
Riding on the “smart city” wave Boustead’s geospatial segment is riding on macro tailwinds, with the world trending towards an era ushered by big data, internet of things and smart cities. Rising urbanisation and development of smart cities trigger the need to have more advanced global positioning systems and navigation platforms to capture location-based data; the ‘smart government’ concept is also driving government agencies to invest significantly into geographic information system (GIS) solutions to translate smart government principles into tangible transformative actions. Stripping out FX impact, we forecast Boustead’s geospatial segment to record 7% revenue CAGR over the next 3 years.
Possible REIT launch in CY20F could be a catalyst We estimate existing projects under development would bring Boustead Projects’ (Boustead’s 52.8% owned subsidiary, BOCJ SP, Add, TP: S$1.24) leasehold portfolio asset base to S$1bn by next year, putting it on track for an eventual REIT listing. With the help of higher occupancy rate after the completion of the ALICE asset stabilisation, we think a REIT listing could materialise as early as CY20F. We think this could unlock significant value, as the investment properties are accounted for at cost less depreciation. A special dividend is also a possibility after a successful REIT listing, in our view.

Non-SGX Report: Boustead Singapore Ltd (BOCS SP): Bouncing Back to Glory