#2 Boustead Projects - Jump in EPS
Sourced from Boustead Projects announcement dated 31st December 2020
The total book value of the properties carried in Boustead Projects' book is worth $125.3 million. It will be sold to the Boustead Industrial fund at a consideration of $332.2 million.
This gives it a sharp 're-valuation' profits of $206.90 million. Even after the relevant costs deduction, profit after tax of Boustead will increase by almost 7-fold to $142.4 million.
Naturally, earnings per share of Boustead will see a boost from 7.2 cents to 45.8 cents per share. That is an increase of 536%!
#3 Boustead Projects Future Outlook
The proceeds of the transaction will be broken down as such:
- S$98.0 million to discharge the existing encumbrances over the Initial Industrial Properties;
- approximately S$0.9 million for the estimated professional and other fees and expenses
- approximately S$72.7 million for the Proposed Subscription
- approximately S$19.6 million for associated taxes, rectification works, estimated aggregate Monthly Shortfall Amount and payment in relation to the Capital Top-Up Deed.
There will be
$132.7 million left after the transactions above. This money could be used for many purposes such as:
- Acquisition of new properties
- Upgrading existing ones
- Special dividend
During this pandemic, these funds could also provide a boost to its sustainable cash flow.
Conclusion
The transaction will have an immediate effect for the 2021 financials of Boustead. Investors who have bought prior to this transaction are bound to have reaped the benefits of it.
Boustead Projects are now priced at a discount to the RNAV of S$1.388/share once the deal is sealed.
In the long-term, it might be hard to predict as it is unclear how the management team will utilize the proceeds left.