Published August 17, 2009
Boustead's Q1 showing may be harbinger of what's to come
By VEN SREENIVASAN
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MAINBOARD-listed engineering group Boustead Singapore recently announced that it had raked in revenue of some $118.9 million and net profit of $9.5 million for its April- June first quarter. These were rises of some 49 per cent and 68 per cent respectively over the same period last year. This despite the challenging economic circumstances during the period.
Yet, there was scant attention paid to the results, either by analysts or the media. One investment house downgraded the stock to a 'hold', from 'buy', citing a slower year ahead.
Boustead, with its multiple business platforms, complex technical capabilities and global presence in a dozen countries stretching from Venezuela, through the Middle East, and into Australasia and South-east Asia, does not fit simplistic labels that define single-business companies.
This 181-year-old company has within itself the capabilities to sustain steady long-term growth.
Boustead came into the second quarter with a strong balance sheet comprising some $145 million in net cash. This could be boosted to $200 million by fiscal year-end from sale of more development property. Meanwhile, its orderbook - which now stands at some $525 million - continues to grow steadily.
Its real estate division remains the biggest business unit, with its orderbook in the region of some $245 million. During the April-June quarter, this unit's revenue surged some 242 per cent to $71.1 million, attributed largely to landmark projects, and a portion of the township project in Libya.
The company added an interesting preamble in its notes to its results. 'Reporting financial results on a quarterly basis may not accurately reflect the performance of the group's project-oriented businesses whose revenue and profit are recorded according to stages of project completion.
'Full-year to full-year comparisons are more appropriate for analytical purposes.'
Indeed, one characteristic of Boustead's business is the 'lumpiness' of earnings recognition. For example, its first quarter included only a small portion of its massive $300 million Al Marj project in Libya.
Similarly, its water and wastewater management unit, Boustead Salcon, reported revenue of just over $2 million, despite sitting on a massive orderbook of $170 million. This unit is working on several major global water projects which are only in their early stages.
There are also the fluctuations in forex rates. Boustead's geo-spatial technology unit's Q109 revenue fell 12 per cent to $19 million, due entirely to weakness of the Australian dollar during that period.
Its energy-related engineering division recently boosted its orderbook to some $110 million after it secured contracts totalling $27 million from refineries and gas processing plants located in Algeria, Australia, Canada and Saudi Arabia.
Last year, Boustead posted full-year net earnings of a record $60.1 million, a 16.8 per cent rise from FY2008's $51.5 million. This came on the back of an 18 per cent rise in full-year revenue to $516.6 million. Since then, the group has snared more projects around the world.
But the challenge for this cash-rich company is to find a way of converting its cash horde into a sustainable stream of recurrent income. It can do this either through acquisitions or by changing parts of its business model.
In the past, it derived a significant portion of its income from the sale of completed or partially completed projects.
This build-and-sell model has ensured seven consecutive years of record earnings and revenue. But with the changed global economic landscape, it has to transition to a build-and-lease or build-and-operate model. This is already happening: about $25-30 million of the current year's bottom line is likely to come from recurrent income streams.
Boustead may not be a company which fits into simple definitions which many market watchers have gotten used to. Rather, this is a global player with complex multiple business models, and technical capabilities.
And those who appreciate it for what it is will know that this technology-driven engineering, resource management and energy company has built up significant traction in the resource-rich and populous growth markets of the developing world.
Its first-quarter performance may just be a teaser of what is yet to come.
Monday, 24 August 2009
Published August 17, 2009
US officials in a pickle over pay of Citi traders
Bank says US$130m exempt from government review
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(WASHINGTON) Senior Obama administration officials were wrestling on Friday with how to handle an explosive executive pay issue involving compensation packages for two traders, totalling more than US$130 million, that Citigroup says are exempt from government review.
Phenomenally successful: The home of Andrew Hall, whose compensation package comes to US$98 million, in Southport, Connecticut
Citigroup's decision leaves top White House and Treasury Department officials unable to do much about some of the highest- paid employees at the troubled bank just two months after the administration announced, with great fanfare, the appointment of an official to crack down on lucrative payouts at companies that have become wards of the state.
On Friday, Citigroup, which is facing a government deadline, submitted the pay packages for its 25 senior executives and highest-paid employees. People involved in that process said Citi advised the Treasury that an energy trader named Andrew Hall, due US$98 million, was exempt from federal review, and so was a second unidentified trader who received more than US$30 million.
Mr Hall and the other trader were paid under an employment contract signed in October, said a person briefed on the contract who was granted anonymity because of not being authorised to disclose the information. That was before a law went into effect instructing Treasury Secretary Timothy Geithner to examine the pay packages of top executives at companies that received exceptional bailout assistance from the government.
In recent weeks, Treasury officials had warned Citigroup executives that the administration would reject the contract, hoping to persuade the bank to rewrite it. Now the bank's decision presents the administration with an awkward political choice between doing little or doing nothing about the contract.
Treasury officials could issue a non-binding advisory opinion critical of the pay package that would carry no legal weight but could ameliorate some of the expected political fallout. Or they could do nothing and face the wrath of the public and Congress, which will consider legislation to limit executive pay after its August recess.
The government's special compensation czar, Kenneth Feinberg, has two months to decide how to proceed. On the touchiest contracts, he is expected to take his cue from top Treasury and White House officials when they decide whether to criticise those deals.
Mr Geithner and two top aides to the president - Rahm Emanuel, the president's chief of staff, and David Axelrod, a senior political adviser - were calculating the political options.
The oil trader at the centre of the pay issue clings to a low profile, quietly making trades from a former dairy farm in Connecticut and emerging occasionally to satisfy his passion for art.
Mr Hall, 58, a British-born naturalised American, has been phenomenally successful with the Citigroup unit Phibro, earning an estimated US$100 million this year while the parent company reported a net loss of US$18.7 billion in 2008 and took US$45 billion in taxpayer bailouts.
In the previous five years, Mr Hall earned more than US$250 million, according to a Wall Street Journal analysis of securities filings and Mr Hall's compensation structure.
That has allowed him to acquire a fabulous art collection, including his favourites among the German neo-expressionists and the American Andy Warhol, and he displays his art in his 1,000-year-old castle in Germany.
'Andy Hall has had a genius for seeing where the market will be a year or two years out and booking bets that have been inexpensive to put on and hugely profitable,' said George Stein, managing director of Commodity Talent LLC. 'He's done this several times in his career and has attracted a following among oil traders and investors.'
Back in 2003, when crude prices hovered around US$30 per barrel, Mr Hall foresaw demand from China and went long on oil, betting heavily on long-term futures and options that paid off when oil soared past US$100 per barrel in 2008.
Through it all, he exercised the clout and independence that come with success, convincing Citi to increase its risk threshold to go longer on oil and fighting off Citi plans to integrate Phibro into its asset-management arm, the Journal reported. -- NYT, Reuters
US officials in a pickle over pay of Citi traders
Bank says US$130m exempt from government review
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Print article
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(WASHINGTON) Senior Obama administration officials were wrestling on Friday with how to handle an explosive executive pay issue involving compensation packages for two traders, totalling more than US$130 million, that Citigroup says are exempt from government review.
Phenomenally successful: The home of Andrew Hall, whose compensation package comes to US$98 million, in Southport, Connecticut
Citigroup's decision leaves top White House and Treasury Department officials unable to do much about some of the highest- paid employees at the troubled bank just two months after the administration announced, with great fanfare, the appointment of an official to crack down on lucrative payouts at companies that have become wards of the state.
On Friday, Citigroup, which is facing a government deadline, submitted the pay packages for its 25 senior executives and highest-paid employees. People involved in that process said Citi advised the Treasury that an energy trader named Andrew Hall, due US$98 million, was exempt from federal review, and so was a second unidentified trader who received more than US$30 million.
Mr Hall and the other trader were paid under an employment contract signed in October, said a person briefed on the contract who was granted anonymity because of not being authorised to disclose the information. That was before a law went into effect instructing Treasury Secretary Timothy Geithner to examine the pay packages of top executives at companies that received exceptional bailout assistance from the government.
In recent weeks, Treasury officials had warned Citigroup executives that the administration would reject the contract, hoping to persuade the bank to rewrite it. Now the bank's decision presents the administration with an awkward political choice between doing little or doing nothing about the contract.
Treasury officials could issue a non-binding advisory opinion critical of the pay package that would carry no legal weight but could ameliorate some of the expected political fallout. Or they could do nothing and face the wrath of the public and Congress, which will consider legislation to limit executive pay after its August recess.
The government's special compensation czar, Kenneth Feinberg, has two months to decide how to proceed. On the touchiest contracts, he is expected to take his cue from top Treasury and White House officials when they decide whether to criticise those deals.
Mr Geithner and two top aides to the president - Rahm Emanuel, the president's chief of staff, and David Axelrod, a senior political adviser - were calculating the political options.
The oil trader at the centre of the pay issue clings to a low profile, quietly making trades from a former dairy farm in Connecticut and emerging occasionally to satisfy his passion for art.
Mr Hall, 58, a British-born naturalised American, has been phenomenally successful with the Citigroup unit Phibro, earning an estimated US$100 million this year while the parent company reported a net loss of US$18.7 billion in 2008 and took US$45 billion in taxpayer bailouts.
In the previous five years, Mr Hall earned more than US$250 million, according to a Wall Street Journal analysis of securities filings and Mr Hall's compensation structure.
That has allowed him to acquire a fabulous art collection, including his favourites among the German neo-expressionists and the American Andy Warhol, and he displays his art in his 1,000-year-old castle in Germany.
'Andy Hall has had a genius for seeing where the market will be a year or two years out and booking bets that have been inexpensive to put on and hugely profitable,' said George Stein, managing director of Commodity Talent LLC. 'He's done this several times in his career and has attracted a following among oil traders and investors.'
Back in 2003, when crude prices hovered around US$30 per barrel, Mr Hall foresaw demand from China and went long on oil, betting heavily on long-term futures and options that paid off when oil soared past US$100 per barrel in 2008.
Through it all, he exercised the clout and independence that come with success, convincing Citi to increase its risk threshold to go longer on oil and fighting off Citi plans to integrate Phibro into its asset-management arm, the Journal reported. -- NYT, Reuters
Friday, 14 August 2009
Published August 14, 2009
M'sian activists hail Internet filter climbdown
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(KUALA LUMPUR) Malaysian rights activists yesterday welcomed the government's decision not to implement a controversial plan to create an Internet filter blocking 'undesirable' websites.
The proposal had been described as a 'horror of horrors' by the opposition which said it would destroy the relative freedom of the Internet in Malaysia, where the mainstream press is tightly controlled.
A senior official with the National Security Council (NSC) last week confirmed AFP reports that the ruling coalition was considering the controls, effectively scrapping a 1996 guarantee that it would not censor the Internet.
However Information Minister Rais Yatim said on Wednesday that the government did not intend to introduce online censoring, telling state media it would instead directly target cases of sedition, fraud and child pornography on the Internet.
'The government has taken a positive step not to implement it. I don't think censoring will make any sense in this globalised world,' said N Siva Subramaniam, a commissioner from the government- backed Human Rights Commission.
'Even if you block certain websites, readers still can get the news from other sources,' he told AFP.
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Activists, however, remained cautious about Mr Rais's comments, saying that while the government appeared to have backed away from the plan for a formal filter, it could still be intent on curtailing freedom of expression.
'We are happy if they are dropping the idea, but we would also like to see what is their approach on what should be available on the Internet,' said V Gayathry from the Centre for Independent Journalism. 'The government seems to be determined to monitor and control online content. It creates fear among the people - it is an implied threat and that itself will make people practise self-censorship.'
Malaysia's lively blogosphere has been a thorn in the side of the Barisan Nasional government, which was been in power for more than half a century but was dealt its worst ever results in elections a year ago.
Internet news portals and blogs, which escape tight controls on the mainstream media, were credited as a key element in the swing towards the opposition which has been adept at using new media to communicate its ideas. -- AFP
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