I recently bought 2,5 % position in Boustead Projects. The business operates from Singapore, so I’m quite far away from my self imposed North Europe mandate. I didn’t do much research on it though, because the idea is so simple.
Firstly, Boustead Projects’ net financial assets, including real estate and real estate development JVs measured at fair values net of financial debt, is 1,47 SGD / share*.
Management more or less directly says that real estate portfolio within the net financial asset portfolio will be monetized.
Secondly, Boustead Projects’ commercial project development business is nicely profitable, expanding to emerging Asia and has record order book.
At 5x EBT, to allow for some cyclicality and potential decrease in margins, the project development business would be worth 0,38 SGD / share.
As a whole, then, the project development busines and the net financial portfolio would be worth about 1,47+0,38=1,85 SGD / share. Current market price is 0,9 SGD / share, so my very rough back of the envelope valuation indicates nice upside.
Singapore is new market for me and with so obvious undervaluation I’m wary of fraud risk but I don’t think it’s the case here. Boustead Projects pays dividends and buys back shares.
More over, I watched this video where the founder speaks about his life and investments, many focused on turnarounds, and got convinced that he is true entreprenaur and cares about his shareholders and the world.
So, in summary, good management, good business, good growth market in emerging Asia, undervalued stock with catalyst and lot of asset value backing the stock price.
* I excluded big cash position from the net financial asset calculation as I assume some or even most will be used in new projects in the project development business (which has record order book)
Disclosure: Long with 2,5% position and might buy more.