Core results ahead of expectations. 4Q09 bottomline of S$34.7m (+91% y-o-y) included as much as S$16m of one-off provisions and forex losses. If not, core profit of S$50.7m would be much higher than our forecast of S$37m. Sales surged 53% y-o-y to S$191m, primarily driven by a doubling in Industrial Real Estate, which completed more of major projects including the Libyan township. Energy-related grew 23% whereas Water and Wastewater fell 72% as revenue recognition was slow for many projects that were still in the early stages.

Slower FY10 but upside possible and hinges on macro dynamics. Boustead exited FY09 with S$580m of order backlog. We estimated about 83% will be recognized in FY10. In view of curtailed infrastructure spending and prolonged negotiations, we expect new orders to shrink to S$280m from S$481m last year. Our orderbook forecast could prove conservative if the credit situation thaws or economy recovers faster than expected.

Upgrade to Buy with S$0.89 target price, as we revised our SOTP value, to align to higher peers valuations for the respective business divisions. Our new TP is pegged to 9x FY10 earnings, in line with historical average trading band of 8-10x in the last four years.