VICOM

I guess the best way to appreciate the high-quality of Vicom's businesses and financial strength is to review the just released FY10 (ended 31Dec10) AR.....
http://info.sgx.com/listprosp.nsf/6c6be9...50027cb1a/$FILE/VICOM%20Annual%20Report%202010.pdf

Based on the latest 87.169m outstanding issued shares (as at 3Mar11), and the last done share price of $3.09 (30Mar11), Vicom now has a market cap. of approx. $269.4m. When compared against Vicom's FY10 NP of $22.165m (+10.6% yoy, over FY09 NP of $20.037m), Mr Market is now attaching a valuation based on a historical PER of approx. 12.2x. If we assume that Vicom can continue to grow its NP at a rate of say 10% yoy, to say approx. $24.4m in FY11, we can also say Mr Market is now attaching a valuation based on a prospective PER of approx. 11.0x.

I suppose in both the above 2 cases, the valuation is quite acceptable - many may even say it is still on a conservative side! - as Vicom's 2 high-quality core businesses are indeed quite rare, and therefore highly valuable.

Apart from Vicom's sustainable/solid profitability and positive cash generation from the operating businesses, we must not forget the additional value in its large nett cash reserve - amounting to $49.083m (equivalent to $0.568/share, based on 86.358m issued shares) as at 31Dec10.

I am looking forward to the coming $0.098/share Final+Special FY10 dividends, payable 0n 13May11, with 'XD' date on 28Apr11.

As expected, Vicom has just released another good set of results for Q1-FY11.....
http://info.sgx.com/webcoranncatth.nsf/V...D001921CC/$file/VICOM_1Q2011.pdf?openelement

In Q1-FY11, Vicom has managed to raise its revenue by $2.12m (or 10.4%) and OP (which approximates FCF) by $0.71m (or 11%) yoy - i.e. the 2 businesses are giving a combined marginal cash margin of approx. 33.5%. What a fat cash cow!

Based on Q1-FY11's NP of $6.139m (+16.6% yoy), Vicom is poised to produce a full-year NP of approx. $24.5m (vs. $22.165m in FY10). Based on the latest (as at 31Mar11) 87.169m issued shares, we can derive a forward EPS of $0.281 for FY11. By applying a very conservative PER of 10x, we get a Fair Value estimate of $2.81 for Vicom's operating business, before attaching any additional value to its large cash reserve. For such a high-quality company, some may argue a higher PER of say even 12x is justified!

As at 31Mar11, Vicom's cash reserve stood at $53.105m, or $0.609/share, before accounting for the $0.098/share Final and Special dividends for FY10 pending payment. Assuming no major capex till Dec11, we can reasonably expect Vicom's cash reserve to grow to approx. $0.77/share. A relevant question: Would Vicom decide to pay another 'jumbo' Interim or Final dividend in FY11?

Just checked my bank account and noted a nice credit from Vicom's $0.098/share Final+Special FY10 dividends. Feeling great!

I am also happy to note that after the 'XD' date on 28Apr11, Vicom's share price has climbed back up from the low of $2.98 recorded on 3May, to close at $3.15 on 13May11 (last Friday). Adding to it the $0.098/share dividends, in effect Mr Market has rewarded Vicom shareholders a further gain over the historical high of $3.20 recorded on 25Apr11. Simply awesome!

Vicom is holding steady.. and creeping upwards slowly.
It traded at S$3.30 for 3 days in a roll. : )

(27-06-2011, 11:38 PM)Polaris Wrote: Vicom is holding steady.. and creeping upwards slowly.
It traded at S$3.30 for 3 days in a roll. : )

Vicom has out-performed STI in price for coming to 2 years now...
http://finance.yahoo.com/echarts?s=V01.S...=undefined
And this is before counting the twice-a-year dividends!

It would be an interesting development if Vicom decides to grow its investment arm even further by purchasing logistic facilities for rental income in the future.

If Vicom chooses to raise its dividend payout ratio to 80%, its dividend for the previous year would have amounted to 20.50 SG cents which translates to a dividend yield of 6.2% based on the last trading price. Personally, I find it odd that yield investors would prefer to acquire debt-laden REITs yielding 5-6% when there is debt-free Vicom ! At the moment, Vicom dividend policy is a minimum of 50% of its shareholder's profit annually. It paid 63% of its earnings to shareholders in the previous year.

(Vested)

vicom has an excellent business will always have a market, lest there be regulation changes. unfortunately, vicom shares are not cheap, presently or even in the past. there was hardly ever a chance to accumulate vicom shares. this makes vicom, as of now, a demanding value proposition. but for the reasons stated above, i agree that vicom makes for one of the best yield plays.

At 10.5x last year's earnings (backed by solid cashflows), nice dividends of 4.9%, 11% yoy growth, how could this not be cheap?

i would say it is adequately priced, taking into account its future potential, which at the moment is somewhat limited. a buy out will probably value vicom at 13x earnings. if a growth business (breadtalk, for example) sells for 10.5x earnings, i will say that's cheap!

(28-06-2011, 01:22 AM)karlmarx Wrote: i would say it is adequately priced, taking into account its future potential, which at the moment is somewhat limited. a buy out will probably value vicom at 13x earnings. if a growth business (breadtalk, for example) sells for 10.5x earnings, i will say that's cheap!

Why do you consider a company generating 7 year PATMI CAGR exceeding 16% without turning to debt be low growth ?

With that being said, Vicom isn't cheap at current prices but I wouldn't say it is expensive either. I don't think a buy-out at 13x FY 10 EPS (or $3.33) will succeed. The yield is still rather attractive for most retailers at that price.