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Broker's take: CGS-CIMB says Boustead could launch a Reit in 2020
BOUSTEAD Singapore's industrial real estate unit, Boustead Projects, could be on track for a Reit listing in as early as 2020, as existing projects under development bring its leasehold portfolio asset base to S$1 billion by next year, according to CGS-CIMB.
"With the help of higher occupancy rate after the completion of the ALICE asset (ALICE@Mediapolis) stabilisation, we think a Reit listing could materialise as early as calendar year 2020," wrote analysts Ong Khang Chuen and Caleb Pang in a Monday note.
"We think this could unlock significant value, as the investment properties are accounted for at cost less depreciation," they said, adding that a special dividend is also possible after a successful Reit listing.
Mainboard-listed Boustead Projects has said it would consider a Reit listing of its portfolio to unlock value. However, the plan to do so has to be "sustainable" and there has to be an element of growth, according to a recap of the firm's July annual general meeting on Motley Fool.
At that time, management had said it hopes to announce something within a few months, but no firm timeline had been set.
Still, the potential Reit listing could be a catalyst for Boustead Singapore, said CGS-CIMB's analysts as they initiated coverage on the stock with an "add" call and S$1.00 target price.
At noon, Boustead Singapore traded at S$0.755, up 2.72 per cent or two Singapore cents.
Mr Ong and Mr Pang said Boustead is "firing on all cylinders", with its real estate and energy-related engineering order book backlog at a five-year high, while its geospatial segment continues to expand steadily.
They believe Boustead is an alternative proxy to the global oil and gas industry recovery trend, as its pre-qualification 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.
In addition, its geospatial segment is riding the trend towards Big Data, the Internet of Things and smart cities, they said.
Boustead's valuation is attractive at 6.8 times FY2003/2020 forecast ex-cash price-to-earnings, while providing a stable dividend yield of 4.1 per cent.