BOUSTEAD Singapore is seeking an extension from the Singapore Exchange Regulation (SGX RegCo) to allow it to provide details of its exit offer for Boustead Projects only after its first-half results have been released.

 

This comes a day after SGX RegCo issued a directive for the delisting of Boustead Projects, as the issuer has not ensured that at least 10 per cent of the total number of issued shares are held by the public.

 

In its notice of compliance, the frontline regulator also directed Boustead Projects and/or Boustead Singapore to make an exit offer to shareholders that is &ldquo fair and reasonable&rdquo , with the proposal to be provided within one month from Tuesday (Sep 26).

 

Boustead Singapore said in a bourse filing on Wednesday that both the company and Boustead Projects are required to announce their first-half results within 45 days from Sep 30, and it is &ldquo unable to provide an update at this juncture&rdquo . It did not indicate the duration of extension required.

 

Boustead Singapore in February announced a voluntary unconditional general offer to privatise its real estate unit, Boustead Projects. The independent financial adviser (IFA), PrimePartners Corporate Finance, opined that the offer was &ldquo not fair but reasonable&rdquo .

 

In its report, the IFA noted that the final offer price of S$0.95 was not within its final estimated valuation range of between S$1.17 and S$1.38.

 

At the close of the offer, Boustead Singapore and its concert parties owned or controlled an aggregate of 299.2 million shares, representing approximately 95.5 per cent of the total number of shares in the company.

 

As less than 10 per cent of Boustead Project shares were held by the public, the counter was suspended in March.

 

Boustead Singapore disclosed previously that it would not be able to avail itself to the powers of compulsory acquisition under the Companies Act.

 

Under section 215(1) of the Companies Act, an offeror who acquires at least 90 per cent of the total number of shares (other than those already held by the offeror, its related corporations or nominees) would be entitled to exercise the right to compulsorily acquire all the shares from shareholders who have not accepted the offer.

 

The offer for Boustead Projects did not extend to 19.28 per cent of the shares that were held through nominees by chairman and chief executive of Boustead Singapore, Wong Fong Fui.

 

SGX RegCo said in March that Boustead Projects must restore its free float after its shares are suspended at the close of the takeover offer by its parent company. Otherwise, Boustead Projects would be directed to delist and provide an exit offer which is deemed fair and reasonable by an IFA.

 

Under listing rules, exit offers in conjunction with voluntary delistings must not only be reasonable, but also fair. An offer is deemed fair if the price offered is equal to or greater than the value of the securities.

 

Boustead Projects was granted two extensions to explore options to comply with listing rules, but did not restore its free float by the Sep 26 deadline.

 

David Gerald, president and chief executive of the Securities Investors Association (Singapore), said on Tuesday that the association supports SGX RegCo&rsquo s actions. &ldquo Some six months have elapsed, and there has been no response from the Boustead companies,&rdquo he noted.

 

The Singapore Exchange Regulation (SGX RegCo) has issued a notice of compliance to Boustead Projects AVM 0.00% and its controlling shareholder Boustead Singapore F9D 0.00% following the former&rsquo s free float restoration deadline.

 

Boustead intends to privatise and delist Boustead Projects from the exchange, closing its privatisation offer on March 27. It was granted three months extension until June 26, followed by another three-months extension until Sept 26 to explore options to comply with the listing rules. 

 

As such, the exchange has directed the company to be delisted if its free float is not restored to at least 10% and it has to make a fair and reasonable exit offer to the shareholders.

 

The company must notify the exchange on its exit offer proposal no later than one month from Sept 26. Failure to comply with the requirements will be deemed to be a contravention of the listing rules, the exchange adds.

 

SIAS president and CEO David Gerald is supporting the exchange&rsquo s action, noting that there has been no response from the Boustead companies over the extension period. 

OCBC Investment Research said Boustead Singapore : F9D +1.79%&rsquo s current share price levels may present an &ldquo attractive entry point&rdquo for investors given its undemanding valuations, above-average yield and exposure to secular megatrends.

 

The research house initiated coverage on the conglomerate with a &ldquo buy&rdquo call and a fair value estimate of S$1.05, which values its real estate segment at a 40 per cent discount to net asset value. 

 

&ldquo Considering that Boustead is trading at a forward price-to-earnings ratio of 8.1 times, which represents more than one standard deviation below its five-year historical average of 11.2 times, we think current valuations present an attractive entry point for investors to lock in a higher-than-average dividend yield,&rdquo said analyst Ada Lim on Friday (Sep 22). 

 

She noted that the stock currently offers a forward dividend yield of 5.3 per cent. This is above its five-year historical average of 4.3 per cent.

 

In Lim&rsquo s view, Boustead Singapore&rsquo s financials are poised to improve based on its project order and deferred services backlogs as at end-FY2023, along with stable contract wins in the year to date.

 

&ldquo Boustead&rsquo s healthy balance sheet and strong net cash position also lends potential for the company to deploy cash through further investments and inorganic acquisitions to unlock value for shareholders, beyond the ongoing privatisation of Boustead Projects,&rdquo added the analyst.

 

Lim is also positive about the group&rsquo s growth profile as she said it provides exposure to multiple long-term secular trends including the Asia-Pacific&rsquo s &ldquo silver tsunami&rdquo , as evident through the group&rsquo s healthcare division that was set up to provide age-related healthcare solutions.    

 

Riding on the trends of climate action and sustainability are Boustead Singapore&rsquo s energy engineering and real estate divisions, which specialise in energy-efficient and eco-sustainable projects. 

 

Given the continued growth in value of Internet of Things, the group&rsquo s geospatial division is likely to see continued demand for its technology and managed services, said Lim. 

Brokers&rsquo take: OCBC starts coverage on Boustead Singapore with &lsquo buy&rsquo call

The research house initiated coverage on the conglomerate with a &ldquo buy&rdquo call and a fair value estimate of S$1.05, which values its real estate segment at a 40 per cent discount to net asset value. 

&ldquo Considering that Boustead is trading at a forward price-to-earnings ratio of 8.1 times, which represents more than one standard deviation below its five-year historical average of 11.2 times, we think current valuations present an attractive entry point for investors to lock in a higher-than-average dividend yield,&rdquo said analyst Ada Lim on Friday (Sep 22). 

She noted that the stock currently offers a forward dividend yield of 5.3 per cent. This is above its five-year historical average of 4.3 per cent.

In Lim&rsquo s view, Boustead Singapore&rsquo s financials are poised to improve based on its project order and deferred services backlogs as at end-FY2023, along with stable contract wins in the year to date.

&ldquo Boustead&rsquo s healthy balance sheet and strong net cash position also lends potential for the company to deploy cash through further investments and inorganic acquisitions to unlock value for shareholders, beyond the  ongoing privatisation of Boustead Projects,&rdquo added the analyst.