AVM.SI - Boustead Projects

[Gregmal]

Anyone else own this? The announcement yesterday IMO is somewhat of a game changer and the start of what I expect to be a catalyst rich, 3 year stretch for Boustead.

 

https://www.fool.sg/2018/12/11/boustead-projects-ltd-more-than-doubles-its-order-book-with-latest-contract-win/

 

2018 was ho hum, but the shares trade at a 40%+ discount to NAV, maybe more. They are evaluating a potential REIT conversion for 2020, and are now getting traction in the right places as the RE market in Singapore has IMO evened out. Very high insider ownership, and from my understanding, they seem to exhibit an approach that places the interests of shareholders first. It's worth mentioning that this was more or less a spin off that got thrown out with the bath water. I don't own many non-US RE plays, but this one is unique.

 

As usual, I am a bit lazy when it comes to littering my writeups with superfluous detail and financial metrics; I assume one reading this is privvy the same information I have, but there is enough out there that one interested can find it.

[_JJ_]

I own this one too (4% position). Their asset light design & build segment seems to be a really good business and leasing provides a steady income stream. I agree that a REIT spin off/conversion will be one of the possible catalysts. They have said it will happen once they reach critical mass, I think 2020 is a good bet.

 

I found this interview quite helpful:

https://valueinvestasia.com/interview-with-keith-chu-from-boustead-singapore/

 

Most of the interview is about Boustead Singapore (holds 50%+ of the Boustead Projects shares), but it also sheds some light on their decision to start the leasing segment and their selection of leasing clients:

 

Stanley Lim: Oh, okay! Interesting! Maybe we can close that off with some discussion on Boustead Project. Boustead Project of course now from your annual report, you talked about the three main type of business model on Boustead project. You know your view and design, your leasing, and of course some strategic partnership or investment, of course now is still design and build that is the main bulk of your revenue stream, but you will see, you know, you guys are moving more and more to what it’s just owning the property outright and having a leasing model for your future projects. Is it something that you are seriously on building up your leasing portfolio?

 

Keith Chu: Well I guess, of course, design and build has always been our bread and butter. I don’t think we’ll ever get away from that in terms of, at least here in Singapore. But if we had a choice, we still love to do more in terms of development and leasing. Of course, quite a fair bit of this is really up to our client, right, but is there global mandate on whether they own their own facilities, or lease facilities. So, that opportunity is there for development and leasing, we would rather take that option because it comes with the recurring income for the long term, so that will be our aim.

 

Now overseas markets, really three overseas markets at this point in time, which is Malaysia, Vietnam, and potentially Indonesia, I’ve skipped China is because China is very difficult market to basically do any of these things, but the other three overseas market. We find that trying to do just pure design and build services is much more difficult, clearly because the clients themselves one proposition where you have the land, you are able to design and build for them, and the location has to be right.

 

We’ve come across the situation where we can do the design and build for them quite easily, but fairly we don’t have the land, so we’ve been looking very actively across these three markets for a land bank that would be suitable, one which is in a good location and one which really meets the target industries that we are out after. Quite a bit of it causes right now focused on logistics type of hubs, networks, so a land in that space and we have been looking for land partners as well. So, these land partners typically of course have land but they don’t have the designer and build expertise, also don’t have clients [inaudible 36:53].

 

Stanley Lim: Okay! That’s interesting of how you guys have a unique position on making everything work. But I think Edmond brought out a nice point saying that you know, because you guys are focused so much on the design and build of a building, when the company wants to lease it from you guys you know, does it include a risk for you because it’s all designed for their purpose and you know, if they’re businesses isn’t take off and they have to move out. Is that a risk for you to have a white elephant or you’re quite easily you can convert that to another purpose or properties?

 

Keith Chu: That’s a fair question. I think when it comes to what we do, we have to basically go through a very in depth due diligence process, also our clients. And I’ll give you an example, during the global financial crisis, just before that, we truly turned away half of all the opportunities that we were seeing because; we felt that after doing the due diligence on the clients, that balance sheet was not strong enough and clearly there, even their profitability at that time also wasn’t showing that they could be very good paymasters, so that part of it is something that we always look at.

 

Secondly, when it comes to the clients who come under this kind of proposition leasing proper proposition, we always asked for corporate guarantee from the parent company, right? So that’s supposed to cover really the duration in 10 years or more until so, they pull out halfway, right, this corporate guarantee we have something to seize upon.

 

The third thing that we do is; I think this goes against conventional thinking. We don’t do any facilities usually for monopolies. You’re thinking monopoly, a good business right? By rights, they should be there for long time, but the reality is what happens if they pull out of Singapore, there is no competitor who could take over the space very easily. At least with a competitor, they could likely take over the space with minimal disruption as well as minimum works that we have to do to the existing facility.

 

And the very last thing that we typically do is in terms of the structural design, which to put in some flexibility that of course you can put in total flexibilities because certain things of the structure cannot be changed, but some flexibility than you could adapt building to a new use to a new industry if it need be.

 

Stanley Lim: Okay! That’s very reassuring to know. I think let’s have the last question. I think Mr. Lee’s asking the last question because of your leasing business, would you consider once you have a sizeable portfolio, you know, even to do Boustead REIT or maybe some of your properties that you’re open to leasing it now or maybe midterm off your lease, you decided to spin it off, and sell it to another REIT, maybe talk about what the management view on this kind of issue?

 

Keith Chu: I guess you know we were one of the first movers right when it came to design, build, and lease. So we had actually quite a number of properties early on and then we were selling one to two a year, we build out maple tree logistics trust, so they put this up the lease, and few other competitors of course in the REIT market, and so clearly the end benefit was going to these guys eventually. So, around the financial crisis period, we said, okay, let’s stop, benefiting these other parties why don’t we do things ourselves and lock things ourselves.

 

The reason, I mean, at least in the past decade, holding onto all these properties and trying to build up a sizeable portfolio, tension really to put it into ideally, either you have a lease early for a property trust, probably trust is not listed that can basically in such an instance, you know, we are strong sponsor to this reach of trust. We also take a controlling stake in it so that we control the direction of it, we will be part of the manager then not the properties, but of course in any case you get the tax incentives, right you get the vision, structure, whereas in the other cases that we’ve looked at, you don’t get that. So, it’s a fine balance at the moment. We haven’t yet reached that critical mass to do it. Then we have been pretty aggressive in picking up new deals over the past few years.

 

So, we’re talking about portfolio size really almost doubling in terms of the value, once we include all our joint venture partners and [inaudible 42:39] data. So we’ve been able to do that part of it, but the final move, whether they do it, the REIT or our property trust that part of it we haven’t yet decided that. The other thing I could probably say is that we probably wouldn’t sell out totally to another revamp or editor of things like that. So we have no intention to let them enjoy those benefits.

 

Stanley Lim: That’s extremely good to know for all the Boustead shareholders. Thank you so much for your time, Keith. It has been a really insightful interview and I guess I will take away. It’s really – Boustead is trying to form itself to be able to continue to grow for the future and that really would not just include your three core businesses, and you guys are really open to other new businesses coming into the fall, and I’m really excited to see your development and I wish you all the best Keith. Thank you very much.

 

[bobozou]

Apologies ahead if I missed something obvious, but it appears to be trading at close to (slightly below) book value;  what makes you say it's at 40% discount to NAV?

[Gregmal]

BV generally is an accounting metric vs NAV is fair market value.

[writser]

Apologies ahead if I missed something obvious, but it appears to be trading at close to (slightly below) book value;  what makes you say it's at 40% discount to NAV?

 

Real estate is valued at cost + depreciation. Appraised value is much higher. I accumulated a position in this name. Looks cheap with a possible catalyst.

[SoonParted]

For those who own some--can you get it through the US ticker BSTJF without paying an obscene bid-ask spread?  It only appears to trade a few times a year.

[Gregmal]

For those who own some--can you get it through the US ticker BSTJF without paying an obscene bid-ask spread?  It only appears to trade a few times a year.

 

 

No. Even the liquid ADR's are often significantly more challenging than just going direct. This one, you're guaranteed to get fleeced.

[SoonParted]

For those who own some--can you get it through the US ticker BSTJF without paying an obscene bid-ask spread?  It only appears to trade a few times a year.

 

 

No. Even the liquid ADR's are often significantly more challenging than just going direct. This one, you're guaranteed to get fleeced.

 

It's odd how it works OK for some thinly traded ADRs and OTC tickers, but not others.  I recently bought Ryman Healthcare, RYHTY, which trades just once or twice a week, and paid about 0.8% over the New Zealand price, which is a quite reasonable spread I think.  But other times--no way.

[Gregmal]

Yea I just try to avoid in general if I can. I dont have many but even stuff like Vitrolife or Burford which trade enough that you should be able to get fair executions, it's inconsistent at best. Boustead is fairly illiquid even on the main exchange. Just asking for problems there.

[BroKon]

So agreed this looks cheap, but I am struggling to get comfortable with the fact that the average lease for their investment properties is around 27 years, and then the land goes back to the SLA presumably for an open auction again, or am I missing some technicality on how lease renewal works in Singapore? Mapletree for example seems to have 99 year leases in their REIT, which obviously makes more sense.

[udravi]

Its seems Boustead just announced divestment of their real estate portfolio:

https://www.bousteadprojects.com/wp-content/uploads/2020/12/2020-12-31-Establishment-of-Boustead-Industrial-Fund.pdf

 

 

The total consideration for the sale of the Directly Held Properties and the Company’s interests in the SPVs is S$332.2 million The total consideration of S$332.2 million represents an excess of S$206.9 million over the Book Value.

[misterkrusty]

Yes sir, the long-awaited day has finally arrived.  I'm currently going thru the doc trying to answer a few main questions:  1) what's the implied cap rate on the properties sold? 2) what's the value of the properties not sold?

 

also would like to know:  what to expect for future sales to BIF?  odds that Metromile doesn't subscribe for its 26%?

[DW1234]

My main takeaways which I'm sure are wrong because I find it hard to comprehend what's going on here:

 

* Converting BP to a REIT is off the table. This isn't great because this would've closed a big part of the discount immediately.

* This is proof that BV is way lower than true value. This is good and probably means there's still a significant discount to 'real' BV.

* BP can offload their properties to BIF and realize a lot of value that way. However they are also part owner of BIF which reduces upside on a longer timescale. If they sell most of their properties to BIF then BP will trade more like the BV of BIF.

* A special dividend might be offered.

* BP earns money with management services to BIF. It's unclear to me what % of net income we're talking about here.

 

 

[Cicero]

Agree with these points, but I am not sure REIT conversion of BIF is entirely off the table. Nothing stopping BP from listing a few years down the road I think. The portfolio as is would have been probably too small and market conditions are probably not good right now either. That's probably why BP did this; allows BP to reinvest the proceeds in new projects and continue to grow the portfolio through drop downs.

 

Metro Holding taking a stake is also a soft indication that there will be a listing at some point. If there wasn't it would be difficult for MH to exit their position (or at least have the option to). From what I understand ADIC was another important co-investor. These guys have longer time horizons that private equity, but will have to exit at some point as well.

 

Separately, I am not at all familiar with Metro Holding, but they seem to be a local property investor which would be an indication that the valuation is probably still fairly attractive.

[writser]

The cap rate is difficult to determine because they are selling a selection of properties (for example, they seem to retain the Vietnam asset and 36 Tuas Road) and some properties are still under construction (Bombardier Aerospace) and they do not split out the rental income per property in the annual report, AFAIK. But one of the biggest assets is the GSK building which is sold for $144.8m. Boustead Projects owns 30% of that building through a JV called BP-VISTA LLP for which they provide some financials. NOI of that entity seems to be about ~9m for 2019 and 2020 on average, implying a ~6% cap rate (see page 131 of the 2020 AR).

 

Noteworthy is that they are keeping a few big properties on the balance sheet, most notably the Alice building. Is that because it is not an industrial property? Because the JV partner doesn't want to sell? Because the property has just been completed and they want to offload it later? Because the institutional buyers don't want it? No clue.

 

The odds that Metromile doesn't subscribe? Also: no sure, though given the fact that they are in you would assume they want to be in. Reading their press release I'd say they are pretty optimistic: http://metroholdings.com.sg/update2020/2020-12-31%20Inv%20In%20Industrial%20Park.pdf (a good read anyway).

 

I'm also not sure if BFI being a private trust, not available for retail investors, is the end-game or whether they want to pursue a listing in the future. I'd say a listing seems unlikely - why would you sell 75% of your property to large investors if an IPO is the end goal? But, as Cicero said, maybe the climate is bad for an IPO and this is an intermediate step that was thought necessary.

 

All in all, this was perhaps not the most desirable outcome from our perspective but to me it still seems quite a lot better than the status quo. I'm quite surprised by the muted market reaction (shares only up ~18% today). Boustead gets SG$137m in unencumbered cash for a partial stake of their real estate, that's a shitload of money for a company with a market cap of ~SG$300m. Even if you don't expect them to pay out all of that (I don't - maybe there will be a small dividend but probably they will reinvest quite a bit) it seems like a very good development. BP is finally selling properties, they will receive a ton of cash, the intent seems to be to drop down future properties, they will get paid for managing the fund in the future and the financials will be easier to understand going forward.

 

Am I being too optimistic? I guess the bear case is that there will be a small dividend and there is still no final separation of the real estate and the construction business for BP shareholders.

[misterkrusty]

Agree with Cicero on the REIT - no reason they couldn't IPO this after growing it to sufficient size and waiting for the right market conditions.  I think it's much easier to get the ball rolling this way via institutional investors.  Keep in mind that BP is entirely a B2B company - they have plenty of relationships w/ institutions due to the JV partnerships, but no retail marketing arm.  Another company I own - Shinoken (8909 in Japan) recently started a private REIT that they hope to IPO in a year or two.  That one has some retail investors because Shinoken has traditionally been a B2C company and thus its easy for them.

 

Writser - good catch on the GSK building.  I'd say this deal seems to validate the independent valuations in the annual report.  Subtracting the sale prices from the HFI and HFS properties, I can get to the remaining values using reasonable assumptions (S$/square meter) for the 4 unsold properties.  Same goes for the remaining 4 unsold completed JV properties.

 

Anyone agree that BIF seems really levered?  I see an initial 456.1m outlay for the properties, funded by 54.8m in equity, 236m of 7.0% notes, and the rest by ... bank debt?  Granted you have 99% occupancy and a 7.7yr WALE, but jeez...

 

I think ALICE wasn't included because it's not fully leased-up yet.  Also think they wanted this to be 100% Singapore, so the foreign stuff stayed out.

 

Does anyone understand the Seletar Aerospace and Continental Ph3 deals?  Why are stakes being sold for so much less than the appraised values?

 

Anyone know if some of the 93m to be spent to "discharge encumberances" will reduce any of the debt on the balance sheet?

[writser]

Yes, the fund seems heavily levered. On top of that it seems very strange that all equity subscribers are also providing 7% debt financing. Why not let a bank finance the whole thing? Does it even make sense to finance buying buildings at a 6% cap rate with 7% debt? My current theory is that this the most tax efficient way to distribute profits. I.e. the debt basically functions as equity. But perhaps others have a better explanation.

 

Also, if the plan really is to IPO this vehicle the debt thing also seems very strange, as far as I can see. $236m @ 7% seems like a terrible rip-off and it seems to me that that makes it very difficult to raise more equity? Consider me skeptical about a short-term IPO being in the cards.

 

Regarding the 93m: I would assume some of it is used to pay off their part of the debt in the GSK JV (30m?)and the rest should be consolidated debt on the balance sheet. I’m definitely not sure about that though and not behind my computer at the moment.

[misterkrusty]

I think you're right about the 7% debt being a way to minimize taxes.  Since all equity holders are to hold debt in the same proportion, they should be indifferent to the size of the coupon aside from tax considerations.  For the same reason, as far as solvency is concerned, only the bank debt should matter.

 

I think an IPO would just pay off the 7% debt and raise public debt in conjunction with the offer.

[writser]

Decent article on SA: https://seekingalpha.com/article/4397252-unpacking-boustead-projects-private-reit-value-unlock .

 

Lastly, the 25% stake BP retains will see a rental income uplift thanks to the tax advantaged REIT structure. Previously, BP had taxable rental income of owned property at a 10% rate (though it did have a remaining depreciation tax shield).

 

So, seems like the new structure perhaps also has tax advantages? Time to ask IR some questions.

[Cicero]

Would be great if the new structure eliminated the taxes. Though it would be a bit strange, because if that was the case then what is the rationale of the 7% notes? If the new structure was not paying any taxes anyway it is not obvious why the notes exist in my view.

 

Probably indeed best to ask IR.

[writser]

Yeah, I did. I am not 100% sure the SA article is correct either. How did they arrive at a 10% tax rate?

[misterkrusty]

statutory rate in Singapore is 17%, fwiw.  tax shields are nice, but doesn't the C-corp then have to pay taxes on distributions received?  i.e. like I'd have to pay taxes on distributions I got from an MLP (or any LP for that matter).

 

on another topic, I spoke with IR and sounds like they're not really thinking about taking this public.  with only 3 investors (boustead, metro, and I suspect that sovereign wealth fund) they can be flexible and quick.  I was thinking that a public REIT could allow them to monetize 100% of the real estate instead of just 75%, but whatever.  this is still a very good outcome.

 

they referred to this as a "capital recycling platform."  you can bet there will be more sales to BIF.  methinks the story here isn't just about getting fair value for the real estate on the books, but also about an ongoing stream of development and sales at 6-7% cap rates, which this company seems able to do at good profit margins.  the time from capital outlay to inflow has been greatly shortened.

 

Will also be mgmt fees for running BIF, including performance fees, but no details revealed yet.

[writser]

A couple of more thoughts after spending some time. Sifting through some of their documents it looks like they still own (pro-forma):

 

- Wuxi Boustead Industrial Development. Valuation, probably not too much, given that the 'for sale' portfolio was appraised at $93m last march and they sold all the rest for $83.1m.

- Port of Tanjung Pelepas (24k sqm)

- Boustead Industrial Park Vietnam (24k sqm)

- 31 Tuas road (10.5k sqm)

- 36 Tuas road (11.5k sqm) - empty I believe: https://www.bousteadprojects.com/wp-content/uploads/2019/07/36-Tuas-Brochure-Final.pdf .

- 98 Tuas bay (7.5k sqm)

- JV: 29 Media Circle (Alice building) - JV carrying value 15m, but that is cost-basis + depreciated. Almost certainly worth more.

- JV: 6 Tampines Road (40k sqm) - Bought for $77.4m in 2019 together with a sovereign wealth fund. I believe empty. https://www.bousteadprojects.com/wp-content/uploads/2020/03/6-Tampines-Industrial-Ave-5-Mar-2020.pdf . Not sure how it is incorporated on the balance sheet.

- stake in China mixed residential project: on the balance sheet for ~$30m.

 

Under construction:

 

Braddell Road ~24m sqm (owns 50% of JV, sold half for $8m)

One north Crescent (Razer Building) ~20k sqm

 

Boustead expects to use ~$98m to pay off debt. I believe ~$27m is for their stake of debt in the GSK joint venture and ~$10m is for the Edward Boustead JV. The rest should be consolidated, which more or less adds up: ~$60m. I expect the pro forma balance sheet is more or less debt free with a ~$250m cash position ($116m already on balance sheet, $137m inflow). On top of that they own a ~$73m stake in debt and equity in their own fund. On top of that they (partially) own a bunch of empty, foreign and under construction real estate. Hard to value this exactly but could easily be worth another $100m+. We have numbers for the China stake - $30m, Braddell Road JV - $8m, Alice building - $15 on the books but almost certainly worth more. Then there is 30k sqm in Tuas bay / road. They are selling some of their other industrial real estate around the $2k / sqm mark. Assuming a hefty haircut these buildings could be worth another $40m. On top of that there is the new fund management business (which I'll value at zero). And on top of that is the actual construction business, which should be worth another $150m based on numbers from the past few years.

 

Sum:

 

$250m net cash

$73m fund stake

$100m in remaining real estate

$150m construction business.

 

or ~$1.80+ / share. I doubt it is going to trade there soon given the convoluted structure, complicated holdings, 70% insider ownership and this being a Singapore construction company. Still, I think it should trade higher. And, of course, NAV is accruing at a nice pace so far. This company actually seems decently (but conservatively) managed.

 

I think it is still very cheap, even if this was perhaps not exactly the catalyst we were hoping for. On top of that, after looking at this a bit more, it seems unlikely that BP will keep all the cash. Honestly, the balance sheet is already so conservative. And as far as I can see pro-forma the company is way underlevered. Not to mention that more cash is probably incoming given that they are probably dropping down more real estate in the near future if everything goes according to plan (e.g. the Alice building and all the stuff currently being revamped). Maybe they are going to buy some more real estate to fix and drop down (like they bought 6 Tampines Road in 2019, for example), but even these can be financed by debt and/or JV partners. Unless the company has _grand plans_ (which is a risk, of course) a distribution seems likely to me.

 

I bought a bit more. Undervalued, lots of pathways towards revaluation (return of capital, easier financials once the fund is online, construction business picking up, an eventual listing of the fund) and if the company keeps plodding along with a ~10% RoE while paying a small dividend and buying back some shares: not a disaster either.

[misterkrusty]

JV properties - unlevered 100% owned values:

 

ALICE - $219.1m (fy19 AGM slide 9: yoy change in asset value of JV portfolio $455.8-23.6.7=219.1m ... ALICE was only JV property completed in FY19)  Works out to $5,530/sm which is much higher than the typical $2-3k/sm but just look at it.  It's the crown jewel. 

 

6 Tampines - global tech company leasing "greater than the supermajority of net leasable area"  this is a high-spec property that Boustead previously built for a Fortune 500 tech company (and was owned by that company).  So they bought it recently for $77.4m and repurposed for the new tenants.  I believe this JV's balance sheet is in the notes, listed as having 8.6m current assets, 81.7 non-current

 

Braddell Road - bot land for $53m.  The total HFI property value dropped by $55.7m yoy in fy20 annual when Braddell was reclassified as a JV once they sold that 49% stake, so that's probably the current value aside from whatever has been spent since during construction.  When Boustead sells a stake at a price that seems way low ($8m in this case), it's usually because the buyer is assuming some of the existing debt on the property.  Such is the case with BIF and 11 Seletar and Continental ph3.

 

11 Seletar & Continental ph3 - see BIF doc

 

98 Tuas (Amcor) - brand new but nuthin' fancy ... maybe a tad over $2k/sm

 

Razer - $100m ... works out to $5,181/sm which I think makes sense in comparison to $/sm for ALICE.  Just look at the pictures.

https://sg.finance.yahoo.com/news/razer-boost-headcount-1000-staff-singapore-end-2020-110913459.html

 

Bombardier ph2 - call me crazy, but I'm assuming same $/sm as phase 1

 

For these last 3 properties you need to subtract some value to account for the fact that they're still under construction.  Boustead expects all 3 to be done by March.  Then for all properties you subtract the debt, then multiply by Boustead's % ownership.  Sometimes the debt is disclosed in the notes.  I just gave you some clues regarding 11 Seletar & CA3.  When in doubt assume 70% debt financing.

 

 

100% owned properties:

Just take appraised values in the annual report and subtract what BIF is paying.

 

Then you add to:

Beijing Tongzhou stake

D&B business

Debt & equity in BIF

Value of mgmt fees from BIF (Boustead not disclosing numbers, but says there will be performance fees along with mgmt fees)

Net cash

 

... to get the super-secret magical fair value number that will bring you great happiness and prosperity for all your days.

 

 

 

 

 

 

 

 

[writser]

Company FAQ on the upcoming transaction: https://www.bousteadprojects.com/wp-content/uploads/2021/02/2021-02-09-Frequently-Asked-Questions-about-Boustead-Industrial-Fund.pdf . Recommended. A large dividend seems unlikely. Long term this still seems like an interesting little company. Some interesting tidbits:

 

On the possibility of a fund listing:

While the future listing for BIF is a possibility (subject to the approvals of BIF’s

investors), the Company’s immediate focus for BIF will be for it to be fully-operational

and be able to grow sustainably, along with the Company’s other fund management

platforms, through participation in new acquisitions and/or developments.

 

On the value of the remaining real estate:

Based on current valuations, the Company has assessed that the aggregate market

value of its remaining properties (including its joint venture partners’ respective shares

in completed developments, developments under construction and the remaining

interest in 10 Tukang Innovation Drive, Continental Building Phase 3 and 11 Seletar

Aerospace Link) is in excess of S$0.7 billion. It should also be noted that the majority

of these remaining properties are joint venture developments.

 

Regarding the BIF fee structure:

BIFM is expected to earn fees similar to what would be earned by private property

trust managers or public-listed REIT managers. As mentioned on page 22 of the

Circular, this includes base fees, performance fees, acquisition fees, divestment fees

and development management fees.

While the Company cannot disclose the exact quantum of these fees due to

commercial sensitivity, the fees are expected to be in line with market standards and

are not expected to exceed 5% of the Company’s reported revenue for 1H FY2021

ended 30 September 2020). The Company expects the fund management business

under BIFM to be profitable from the onset and the fee income is envisaged to grow

as the assets under BIFM’s management grow