Hot stock: Boustead stocks surge as much as 10% after news of takeover offer

SHARES of both Boustead Singapore and Boustead Projects climbed on Tuesday (Feb 7) after the former on Monday made an offer to take its real estate subsidiary private. 

As at 9 am, Boustead Singapore rose 10.3 per cent or S$0.085 to S$0.91, while Boustead Projects rose 10.7 per cent or S$0.09 to S$0.93. The last time the counters traded at such levels was in September and July 2022, respectively.

Boustead Projects later eased to trade at S$0.915, up S$0.075 or 8.9 per cent, as at 9.28 am. Its parent company was up S$0.06 or 7.3 per cent at S$0.885 by 9.29 am.

No married deals were recorded in early trade for either counter, according to ShareInvestor data.

Mainboard-listed Boustead Singapore announced after trading hours on Monday that it is looking to take Boustead Projects private at S$0.90 per share. 

The S$0.90 per share offer translates to a premium of 7.8 per cent over Boustead Projects’ last traded price per share of S$0.835 on the Singapore Exchange on Feb 3.

CGS-CIMB said it is positive on the transaction as it sees Boustead Projects tapping the parent company’s “strong net cash position with minimal capital expenditure needs”.

Analyst Ong Khang Chuen added that the current offer price of S$0.90 per share is in favour of Boustead Singapore, as it represents about a 50 per cent discount to its revalued net asset value of S$1.79 for the real estate subsidiary.

Ong also projects the first half of FY2023 to be a “fundamental inflection point” for the engineering and technology company and expects its earnings to recover beginning the second half. 

CGS-CIMB maintains its “add” call on Boustead Singapore with an unchanged price target of S$1.35.  

Separately, Smartkarma believes Boustead Projects’ shareholders do not stand to benefit from the deal at the current offer price.

Citing relative valuation figures from Boustead Singapore’s independent adviser EY, Arun George, an analyst at Global Equity Research who publishes on Smartkarma, said Boustead Projects’ trailing price to net asset value ratio of 0.71 times, as implied by the offer price, is unattractive in comparison to its peer multiples. 

George also noted that the offer price is broadly in line with Boustead Projects’ past years’ average share price. The counter’s share price itself has exceeded this offer price as recently as Jun 27, 2022 when it traded at S$0.92, he added.