Excerpts from DCG Asia Value Fund's annual report for the year ended June 2016 are republished with permission. Since inception in September 2011, the Fund has returned 57.5% net of all fees, more than double the MSCI Asia ex-Japan Index’s 25.8% gain. DCG Capital holds a Capital Markets Services licence for fund management activities under the Securities and Futures Act of Singapore and is regulated by the Monetary Authority of Singapore.
The industrial real estate business + net cash works out to around S$0.63/share. The current share price is S$0.80 which implies that the cash cow Geo spatial business trades at only 6.7x PER.
|♦ The 3 businesses of Boustead|
Today Boustead has 3 businesses – Geo Spatial, Energy (including waste water treatment) and Real Estate Solutions.
More recently, the stock took a beating, falling from a high S$1.94 to S$0.79 due to concern over weak energy segment earnings and Singapore’s slowing industrial property sector.
We saw this as a buying opportunity with the stock trading cheaply at a PER of about 12x and PBR of 1.2x.
The book value includes their industrial real estate portfolio which is held at historical cost.
Mr. Wong has a good track record of compounding shareholder value, achieving per share book value growth of 15% p.a. over the last 10 years.
This excludes dividends paid which adds another 2% to 5% return to shareholders.
Boustead has a rock-solid balance sheet with net cash of about S$147 million.
Energy segment earnings may be close to bottoming, while those of real estate and geospatial should remain resilient over the long term.
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