Executive Summary

Boustead Singapore Limited is a 198-year-old Singapore conglomerate operating four business divisions: Geospatial (42% of FY2025 revenue), Energy Engineering (30%), Real Estate Solutions (25%), and Healthcare (2%). The company is controlled by Chairman & Group CEO Wong Fong Fui, who holds a ~44% stake and has built a diversified, cash-rich industrial group with a long track record of value creation. Over the past 20 years, the total shareholder return has compounded at 11.1% annually.

Investment Thesis in 3 Sentences: Boustead Singapore is a well-managed, family-controlled conglomerate trading at a reasonable valuation with a fortress balance sheet (SGD 334M cash, minimal debt). The Geospatial Division -- the crown jewel -- is a high-margin, recurring-revenue software distribution business growing steadily. At current prices, the stock offers a modest margin of safety with a strong dividend yield and meaningful catalysts in the UIB real estate platform and potential asset monetization.

Key Metrics Dashboard:

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PHASE 0: OPPORTUNITY IDENTIFICATION (Klarman)

Why Does This Opportunity Exist?

1. Geographical Neglect: Boustead Singapore is listed on the SGX, a small exchange with limited international investor coverage. The stock has minimal analyst coverage (one analyst with a SGD 1.40 target that appears stale and far below current price).

2. Conglomerate Discount: The market applies a structural discount to diversified conglomerates. Boustead has four divisions with different business models, making it hard for generalist investors to value properly.

3. Revenue Volatility Masking Quality: FY2025 revenue dropped 31% due to project timing (lower E&C backlog). This creates a misleading optic, even though profitability improved significantly. Headline revenue declines scare away momentum-oriented investors.

4. Lumpy Earnings: The Real Estate Solutions and Energy Engineering divisions have project-based, lumpy earnings that make the stock look volatile on a quarterly basis. Patient investors willing to look through this cyclicality find a fundamentally sound business.

5. Recent Price Surge: The stock has risen ~116% over the past 12 months (from ~SGD 0.90 to SGD 2.25), which means the easiest gains are behind us. The question is whether the business quality and growth trajectory justifies the current valuation.

Source of Potential Mispricing

The Geospatial Division alone generates recurring revenue and high margins that, if valued independently, could justify a significant portion of the current market cap. The rest of the business -- including SGD 334M in cash and SGD 200M+ in investment properties and joint ventures -- comes at a substantial discount.

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PHASE 1: RISK ANALYSIS (Inversion Thinking)

Top 3 Ways This Could Fail

1. Loss of Esri Distribution Rights (Severity: Catastrophic, Probability: Very Low)

The Geospatial Division is an exclusive distributor for Esri ArcGIS software in Australia, Singapore, Malaysia, Indonesia, Bangladesh, and Papua New Guinea. Esri Inc. (USA) owns the technology. If Esri decided to go direct in these markets or awarded distribution to a competitor, Boustead's most valuable business would be gutted.

Mitigant: The distribution relationship has been in place for decades. Boustead has invested heavily in building an ecosystem of 7,000+ clients, professional services capability, and localized solutions (SmarterWX, BGT products). Esri has no history of pulling distribution rights from long-standing, successful partners. The risk is very low but non-zero.

Expected Loss = P(0.02) x Impact(50% of fair value) = 1% of position value.

2. Energy Engineering Secular Decline (Severity: Moderate, Probability: Low-Medium)

If the global energy transition accelerates faster than expected, demand for process heaters, WHCPs, and furnaces could decline structurally. The division generated SGD 26.8M in operating profit in FY2025 but management notes a "relatively weak" global sales pipeline, especially in the US.

Mitigant: Industrial processes like refining, petrochemicals, and fertilizer production cannot be electrified. Hydrogen production (green or blue) requires the same heat transfer equipment. Years of upstream underinvestment since 2015 create a structural catch-up need. However, the division faces tariff uncertainty and cost volatility.

Expected Loss = P(0.15) x Impact(15% of fair value) = 2.3% of position value.

3. Real Estate JV Losses Persist (Severity: Moderate, Probability: Medium)

The share of loss from associates and joint ventures was SGD 19.2M in FY2025 (vs. SGD 11.6M in FY2024). The Bideford House hotel is underperforming, and various real estate JVs are dragging on profitability. If these losses continue or worsen, they represent a persistent drag.

Mitigant: The UIB platform formation signals management's intent to restructure and monetize real estate assets. A potential SGX-listed REIT from UIB assets could unlock substantial value. However, the timeline is uncertain.

Expected Loss = P(0.30) x Impact(10% of fair value) = 3% of position value.

Inversion Section

How could this investment lose 50%+ permanently?

• Loss of Esri distribution rights (extremely unlikely but catastrophic)
• Massive fraud or governance failure (extremely unlikely given 198-year track record and strong audit)
• Destruction of cash position through value-destroying acquisitions (possible but Wong family's 44% stake provides alignment)

What would make me sell immediately?

• Any indication that Esri is reconsidering the distribution relationship
• Evidence of related-party transactions that transfer value away from minority shareholders
• Management embarking on large debt-funded acquisitions outside core competency

3-Sentence Bear Case: Boustead is a conglomerate where the most valuable asset (Esri distribution) sits on a relationship that could theoretically be revoked. Revenue is shrinking, the Energy Engineering pipeline is weak, and the Healthcare division is loss-making. After a 116% price rally, the stock now trades at 16x adjusted earnings -- rich for a conglomerate with lumpy project earnings.

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PHASE 2: FINANCIAL ANALYSIS

5-Year Financial Performance

Includes special dividend of 4.0 cents related to BIF value-unlocking.

Key Observations:

1. Revenue is lumpy but has averaged ~SGD 635M over 5 years
2. Adjusted net profit has grown steadily from SGD 31.5M to SGD 68.6M (CAGR ~22%)
3. NAV per share has compounded at ~7% annually over 5 years
4. The company consistently generates strong free cash flow (SGD 51-92M range)
5. Net cash position remains very strong at SGD 306M (58 cents per share)

Division Profitability (FY2025)

Includes one-off SGD 29M gain from UIB transaction. Normalized: SGD 8.8M, 6.6% margin.

Balance Sheet Strength (31 March 2025)

The balance sheet is a fortress. Borrowings are a negligible SGD 7.9M against SGD 334M in cash. The company could pay off all debt with less than 3% of its cash. This is a rare level of financial conservatism.

Owner Earnings Calculation

Net Profit (FY2025, adjusted)            = SGD 68.6M
Add back: Depreciation & Amortization    = SGD 8.8M
Less: Maintenance CapEx (estimated)      = SGD (5.0M)
Less: Working Capital Changes (norm.)    = SGD (5.0M)
                                         -----------
Owner Earnings (approx.)                 = SGD 67.4M
Owner Earnings per Share                 = ~13.7 cents

VALUATION TRINITY

1. Liquidation Value (Floor)

NAV per share = 118.3 cents = SGD 1.183. Current price SGD 2.25 = 1.90x P/NAV.

The NCAV is not meaningful for this analysis because the value of Boustead lies in its ongoing businesses, particularly the Geospatial Division, not in liquidation.

2. Going Concern Value (DCF, Conservative)

Using normalized owner earnings of SGD 67M, a 10% discount rate, and 3% terminal growth:

Conservative Value = Owner Earnings x 15 = SGD 67M x 15 = SGD 1,005M Per share = SGD 1,005M / 491.6M shares = SGD 2.04

Fair Value (assuming quality premium): = SGD 67M x 18 = SGD 1,206M Per share = SGD 2.45

3. Sum-of-Parts Valuation

Note: The Geospatial Division alone, at 18x operating profit, is worth SGD 934M -- or SGD 1.90 per share. This is the crown jewel.

A more conservative sum-of-parts:

4. Intrinsic Value Estimate (Weighted Average)

Margin of Safety

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PHASE 3: MOAT ANALYSIS

Moat Sources

1. Exclusive Esri Distribution (Geospatial Division) -- WIDE for the division

The Geospatial Division holds exclusive distribution rights for Esri ArcGIS -- the global leader in GIS with 40%+ market share -- across Australia, Singapore, Malaysia, Indonesia, Bangladesh, and Papua New Guinea. This is not merely a reseller arrangement; Boustead has built a full ecosystem including:

• Professional services and consulting (SGD 147M in maintenance/services revenue in FY2025)
• 160+ active enterprise agreements (multi-year recurring contracts)
• 7,000+ client organizations including key government agencies
• Localized solutions (SmarterWX weather platform, BGT professional services)
• Deep domain expertise in national defense, government, resources, utilities sectors

Measurement: Revenue CAGR of the division over 4 years: 42% in SGD (higher in local currencies due to AUD/MYR/IDR headwinds). Operating margin of 23.4%. Operating profit growth from SGD 32.2M (FY2021) to SGD 51.9M (FY2025) = 12.7% CAGR.

2. Engineering Track Record & Niche Expertise (Energy Engineering)

Boustead serves 70% of the world's top 20 energy corporations with specialized heat transfer equipment. The installed base of projects across 95 countries creates a trust-based relationship barrier.

Measurement: The division has maintained profitability through energy cycles. However, moat is narrow because competition exists and customers can theoretically switch vendors for new projects.

3. Real Estate Track Record in Singapore (Real Estate Solutions)

22% of all Green Mark Platinum-rated private sector developments on industrial-zoned land in Singapore. Strong relationships with Fortune 500 tenants. But competition is intensifying and this is a cyclical business.

Moat Durability Assessment

Key Question: Will this moat be wider or narrower in 10 years?

Answer: The Geospatial moat is likely to be stable to slightly wider as GIS technology becomes mainstream and enterprise agreements create deeper lock-in. The Energy Engineering moat is likely stable but faces gradual secular headwind. The Real Estate moat is narrowing as competition intensifies. On balance: Stable moat at the Group level, with the Geospatial Division as the anchor.

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PHASE 4: MANAGEMENT & INCENTIVE ANALYSIS

Owner-Operator Assessment

Wong Fong Fui -- Chairman & Group CEO

• Founded the modern Boustead Group
• Deemed interest: 215.6 million shares (~43.9% of outstanding)
• At current price: SGD 485M -- massive skin in the game
• Sons are involved: Wong Yu Loon (Deputy Group CEO, age 50) and Wong Yu Wei (Group COO, Executive Director of Boustead Projects, age 48)
• This is a family-controlled business with succession planning in progress

Capital Allocation Track Record (Last 5 Years):

Munger's Question: "If I were management with these incentives, what would I do?"

With a 44% stake and family succession in progress, management is incentivized to grow the business sustainably and maintain the dividend. The lack of aggressive leverage or empire-building is consistent with an owner who cares about long-term value rather than short-term EPS growth. The scrip dividend option (allowing shareholders to take dividends in shares) reduces cash outflow while maintaining dividend credibility.

The family's significant stake means they eat their own cooking -- their wealth rises and falls with the stock price. This is strong alignment.

Concern: The dual role of Chairman & CEO (Wong Fong Fui holds both) is a governance weakness. However, the independent directors appear competent and the Audit & Risk Committee is fully independent.

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PHASE 5: CATALYST ANALYSIS

The UIB transaction is the most significant near-term catalyst. Management has announced a "strategic review" of Singapore logistics and industrial real estate assets, including a potential sale to a REIT to be listed on SGX. If this materializes, it could crystallize the value of assets currently held at book value in JVs and associates.

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PHASE 6: DECISION SYNTHESIS

Expected Return Probability Tree

3-year expected return of ~19%, or ~6% annualized before dividends. Adding the ~3.3% dividend yield gives a total expected return of ~9% annualized.

Sell Triggers (Non-Price-Based)

1. Thesis Break: Any indication Esri is reconsidering distribution arrangements
2. Moat Erosion: Geospatial Division revenue declining for 2+ consecutive years without currency explanation
3. Management Failure: Related-party transactions that transfer value, or leverage exceeding SGD 200M in debt
4. Capital Allocation: Acquisition larger than SGD 200M outside core competencies

Monitoring Metrics

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INVESTMENT RECOMMENDATION

+-------------------------------------------------------------------+
|                     INVESTMENT RECOMMENDATION                      |
+-------------------------------------------------------------------+
| Company: Boustead Singapore Limited    Ticker: F9D.SG              |
| Current Price: SGD 2.25    Date: 22 February 2026                  |
+-------------------------------------------------------------------+
| VALUATION SUMMARY                                                  |
| +-------------------------+-------------+---------------------+    |
| | Method                  | Value/Share | vs Current Price    |    |
| +-------------------------+-------------+---------------------+    |
| | Graham Number           | SGD 1.61    | -28% (overvalued)   |    |
| | Net Asset Value         | SGD 1.18    | -47% (overvalued)   |    |
| | DCF (Conservative 15x)  | SGD 2.04    | -9% (overvalued)    |    |
| | DCF (Fair 18x)          | SGD 2.45    | +9% MOS             |    |
| | Sum-of-Parts (Cons.)    | SGD 3.09    | +27% MOS            |    |
| | Sum-of-Parts (Optim.)   | SGD 3.62    | +38% MOS            |    |
| +-------------------------+-------------+---------------------+    |
|                                                                    |
| INTRINSIC VALUE ESTIMATE: SGD 2.80 (weighted average)              |
| MARGIN OF SAFETY: 20%                                              |
+-------------------------------------------------------------------+
| RECOMMENDATION:  [X] WAIT   [ ] BUY   [ ] HOLD   [ ] SELL         |
+-------------------------------------------------------------------+
| STRONG BUY PRICE:             SGD 1.85 (34% below IV)             |
| ACCUMULATE PRICE:             SGD 2.10 (25% below IV)             |
| FAIR VALUE:                   SGD 2.80                             |
| TAKE PROFITS PRICE:           SGD 3.40 (20% above IV)             |
| SELL PRICE:                   SGD 4.20 (50% above IV)             |
+-------------------------------------------------------------------+
| POSITION SIZE: 2-3% of portfolio                                   |
| CATALYST: UIB REIT listing / Asset monetization (12-24 months)     |
| PRIMARY RISK: Esri distribution relationship (very low prob.)      |
| SELL TRIGGER: Esri distribution loss / Family ownership below 30%  |
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Verdict: WAIT

Boustead Singapore is a quality business with strong management alignment, a fortress balance sheet, and an excellent crown-jewel division (Geospatial). However, after a 116% price rally over the past year, the stock trades at the boundary between fair and fully valued. The 20% margin of safety exists primarily in the sum-of-parts methodology, which relies on multiple expansion and catalyst realization.

For investors who already own shares: HOLD. The business quality justifies continued ownership.

For new investors: WAIT for a pullback to SGD 2.10 or below (25% discount to IV) before initiating a position. Given the lumpy nature of earnings, there will likely be quarters where reported numbers disappoint and the stock corrects. That will be the entry opportunity.

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