Boustead Singapore's Strategy Amidst The Covid-19 Pandemic.pdf

Boustead Singapore, one of the country's oldest engineering and property companies, is navigating the COVID-19 pandemic with a conservative approach under Chairman and Group CEO Wong Fong Fui. Despite facing crises including past pandemics, wars, and economic downturns, Boustead's latest financial statements (FY2020 ended March 31) showed robust performance, with revenue up 54.4% to $726.6 million and NAV per share higher at 70.3 cents.

Business Divisions:

- Energy Engineering: Focused on maintenance and repair services due to the 2014 crash in crude oil prices, securing record orders worth almost three-quarters of new contracts in FY2020.
- Real Estate (Boustead Projects): Involved in business park and industrial property design and construction in Singapore, China, Malaysia, and Vietnam.
- Geospatial Technology: Exclusive distributor of Esri ArcGIS technology for geographic information mapping software.
- Healthcare: Provides medical solutions for age-related chronic diseases and mobility issues, with ongoing expansion.

Strategic Approach:

Boustead's philosophy emphasizes conservative strategies to generate positive cash flow in each business unit. The energy engineering division adapted by focusing on long-term, high-margin maintenance contracts. The strong order book is attributed to the company's reliability and solid balance sheet.

Oil Industry Outlook:

While Boustead's energy-related engineering division has been shielded from the downturn due to its niche focus, the prolonged slump in the oil industry poses challenges for the sector as a whole. Divestments are occurring, but Boustead is hesitant to sell its division, citing its lean and people-oriented nature with minimal capital investment.

Renewable Energy:

Wong Fong Fui is cautious about diversifying into renewable energy, acknowledging that while costs have decreased, opportunities remain limited compared to fossil fuels.