VICOM

(24-01-2011, 02:05 PM)yeokiwi Wrote: It seems that some investors are speculating a special 30th anniversary dividend?

It is a perfectly appropriate and correct thing to do, don't you think so? And therefore it is a reasonable bet.

As expected, Vicom has just released a set of positive FY10 (ended 31Dec10) full-year results.....
http://info.sgx.com/webcoranncatth.nsf/V...3002F4DD3/$file/VICOM_FY2010.pdf?openelement

The unbroken trend of a steady improvement in both revenue and NP in the 2 core business activities continues.

A total $0.098/share in dividends - comprising a Final of $0.066/share and a Special of $0.032/share) declared. When added to the $0.063/share Interim dividend paid in Aug10, total payout for FY10 amounts to $0.161/share.

As usual, outstanding results! I have analysed the FY2010 results: http://financiallyfreenow.wordpress.com/...-analysis/

(12-02-2011, 06:02 PM)taka666 Wrote: As usual, outstanding results! I have analysed the FY2010 results: http://financiallyfreenow.wordpress.com/...-analysis/

Thanks for the analysis. Good Quarter / year for Vicom.

Because half of the equity is cash and there is 0 debt, hypothetically if Vicom decided to suddenly return all the cash to the shareholders, it could still continue to function nicely without taking on any debt. So a 'real' ROE could be closer to double the 20% you mentioned.

Of all the things to do with the cash: hike the dividend, return to shareholders, etc, the one thing they should NOT do is to buy up the last vehicle inspection company. It would be very troublesome to raise prices without lots of bad press, or scrutiny by CCS or CASE. This is a very comfy oligopoly.

The not so good part is the increase in purchase of vehicles, premises and equipment, which unfortunately they don't tell us what and why.

The Setsco business has a ROE higher than 30%, (operating income less tax divided by last year's segment net assets), 12+% growth. Nice niche to be in, regardless of the 'competitive pressures'.

Thanks for your comments redcorolla95. Yes, that is why I've mentioned in the post that ROE could have increased if not for the huge horde of cash.

I'm not sure why they have not revealed why the sudden increase in capex compared to all the previous years.

Also, I'm unclear about "GST receivable for the lump sum payment of land lease renewal at Sin Ming". Do you know what is it about?

Just took a look this company. It may be profitable, cash rich and pays good dividends but it does not convince as an aggressive business expanding well with a great (in contrast to good) business.

1. Setsco is the division growing its revenue. However, based on FY2010 AR, its Ops Profit of $9830k is about the same as the Vehicle Inspection's $9544k.
2. Unclear if Vicom still has 70% of market, and i could not see how the original 70% was derived. StarAuto also claims to be a leader. So it could be an issue of definition. I could claim to have 90% share for vehicle inspection in my home.
3. Some competitors in Setsco's areas appear to be SGS and STS (a unit of ST Kinectics). These would be formidable competitors. Could Vicom buy over STS just like it did Setsco? Doubt it because STS probably much more bigger, with better expertise.
4. However as pointed out, testing could be a growing market. Does it have expertise or a moat? Is Setsco pushing its business aggressively? Based on its website, there's not heavy marketing ambition. Can't see how it would have very special expertise beyond maybe a few individuals. Of course this could change later. Would also accept that this is just a personal, single facet assessment from its website.

That's not to say Vicom may not be a good investment.

My 2 cents on an unfamiliar business after reading the interest from forummers. Please feel free to re-butt.

I agree that Vicom doesn't have much growth left in its business. It's a mature business (like Starhub, Singpost) that's why it's giving out so much dividends instead of pumping back into its company. I'm invested purely due to the dividends and not for the growth. Any growth that comes is an added bonus. There is competition in the non-vehicle testing arena as it's a fragmented segment and I'm keeping a close eye on this.

For vehicle testing, I think there's room to grow overseas - esp with its parentage. For Stetsco, the opportunities are out there locally as well. But (purely from its websites), i don't see that the company is ambitious or hungry, or currently preparing/positioned to do it.

I'm not sure about the venturing overseas part but I would be glad if Vicom looked into it. There might be growth there for the company in this aspect.

is vicom still worth to buy at current price?