VICOM

(12-02-2014, 08:36 AM)yeokiwi Wrote:

(11-02-2014, 11:17 PM)felixleong Wrote: Vicom is a very good stock but the PE is way too high now
I think buying its parent comfort delgro would give investors more bang for their buck isnt it?

Would you buy a REIT that gives a yield of 3.9%, PE of 17, no debt, 88 cts of cash per share, no significant competition and good pricing power?
Looking from the REIT angle, Vicom looks great as compared with the S'pore REITs.

Even with no growth, the price should not change much due to its quality of earning.

I guess there are lots of companies around to compare ..

There are counters like that even more 'attractive' to vicom
e.g.
PNE Industries
Yield 4.55% PE 7.84, no debt, cashflow per share 0.0169
Price to book 0.42
book value $0.21
no Moat like vicom

vs

Compared to Vicom
Price to book 4.08 <<<< Pretty expensive IMO
Book value per share $1.38
Moat may erode due to govt policies...

(12-02-2014, 10:47 AM)orangetea Wrote: Moat may erode due to govt policies...

LTA should enforce independent inspection of MRT trains and tracks like the cars on the road...eh, but who can/should do the inspection?

...and Vicom should (ask for an) increase the price of car inspection.

(12-02-2014, 10:47 AM)orangetea Wrote:

(12-02-2014, 08:36 AM)yeokiwi Wrote:

(11-02-2014, 11:17 PM)felixleong Wrote: Vicom is a very good stock but the PE is way too high now
I think buying its parent comfort delgro would give investors more bang for their buck isnt it?

Would you buy a REIT that gives a yield of 3.9%, PE of 17, no debt, 88 cts of cash per share, no significant competition and good pricing power?
Looking from the REIT angle, Vicom looks great as compared with the S'pore REITs.

Even with no growth, the price should not change much due to its quality of earning.

I guess there are lots of companies around to compare ..

There are counters like that even more 'attractive' to vicom
e.g.
PNE Industries
Yield 4.55% PE 7.84, no debt, cashflow per share 0.0169
Price to book 0.42
book value $0.21
no Moat like vicom

vs

Compared to Vicom
Price to book 4.08 <<<< Pretty expensive IMO
Book value per share $1.38
Moat may erode due to govt policies...

People have short memories!
The biggest danger to Vicom, assuming no change in policies, is falling vehicle COEs.
Remember just 6 to 8 years ago when COEs were dropping? New car prices dropped and dropped. Cars were deregistered/exported within less than 3 years. No need to send for vehicle inspection then, since many cars were new!
Will it happen again?
Possible I think, in 2 to 3 years time.

(13-02-2014, 12:13 AM)mee2 Wrote: People have short memories!
The biggest danger to Vicom, assuming no change in policies, is falling vehicle COEs.
Remember just 6 to 8 years ago when COEs were dropping? New car prices dropped and dropped. Cars were deregistered/exported within less than 3 years. No need to send for vehicle inspection then, since many cars were new!
Will it happen again?
Possible I think, in 2 to 3 years time.

You have hit the bullseye !

(vested)

(13-02-2014, 12:13 AM)mee2 Wrote:

(12-02-2014, 10:47 AM)orangetea Wrote:

(12-02-2014, 08:36 AM)yeokiwi Wrote:

(11-02-2014, 11:17 PM)felixleong Wrote: Vicom is a very good stock but the PE is way too high now
I think buying its parent comfort delgro would give investors more bang for their buck isnt it?

Would you buy a REIT that gives a yield of 3.9%, PE of 17, no debt, 88 cts of cash per share, no significant competition and good pricing power?
Looking from the REIT angle, Vicom looks great as compared with the S'pore REITs.

Even with no growth, the price should not change much due to its quality of earning.

I guess there are lots of companies around to compare ..

There are counters like that even more 'attractive' to vicom
e.g.
PNE Industries
Yield 4.55% PE 7.84, no debt, cashflow per share 0.0169
Price to book 0.42
book value $0.21
no Moat like vicom

vs

Compared to Vicom
Price to book 4.08 <<<< Pretty expensive IMO
Book value per share $1.38
Moat may erode due to govt policies...

People have short memories!
The biggest danger to Vicom, assuming no change in policies, is falling vehicle COEs.
Remember just 6 to 8 years ago when COEs were dropping? New car prices dropped and dropped. Cars were deregistered/exported within less than 3 years. No need to send for vehicle inspection then, since many cars were new!
Will it happen again?
Possible I think, in 2 to 3 years time.

New cars no need to inspect for first 3 years. After that, alternate years.
So no need COE price to drop.
Once the peak COE supply start to expire within next 2-3 years, the supply of old cars for inspection will drop.
If you look at COE supply over time, it is cyclical. And we are at peak or past peak.

(13-02-2014, 08:45 AM)opmi Wrote: If you look at COE supply over time, it is cyclical. And we are at peak or past peak.

http://www.lta.gov.sg/content/dam/ltaweb...3M-Age.pdf
http://www.lta.gov.sg/content/dam/ltaweb...h_Insp.pdf

From the data so far, the best is yet to be (at least for another year....)

(13-02-2014, 08:45 AM)opmi Wrote: New cars no need to inspect for first 3 years. After that, alternate years.

There is this misunderstanding that I've seen in people analysing this stock. Before a new car is allowed on the road, it must pass an inspection. Car owners don't see that because it's done before the car is handed over.

At the end of Year 3, the car has to be inspected before the road tax for Year 4 can be issued.

So here we have 2 inspections over a span of ~36 months. I don't see how that is inferior to a biennially inspection (1 every 24 months) from Vicom's perspective.

Here's the table for inspection.

Inspection has to be performed before the end of
Year 0; Year 3; Year 5; Year 7; Year 9

As you can see, new cars are inspected in advance. i.e. the inspection which was supposed to happened in Year 1 actually took place earlier. If anything, new cars are better businesses for Vicom.

(13-02-2014, 09:27 AM)cif5000 Wrote:

(13-02-2014, 08:45 AM)opmi Wrote: New cars no need to inspect for first 3 years. After that, alternate years.

There is this misunderstanding that I've seen in people analysing this stock. Before a new car is allowed on the road, it must pass an inspection. Car owners don't see that because it's done before the car is handed over.

At the end of Year 3, the car has to be inspected before the road tax for Year 4 can be issued.

So here we have 2 inspections over a span of ~36 months. I don't see how that is inferior to a biennially inspection (1 every 24 months) from Vicom's perspective.

Here's the table for inspection.

Inspection has to be performed before the end of
Year 0; Year 3; Year 5; Year 7; Year 9

As you can see, new cars are inspected in advance. i.e. the inspection which was supposed to happened in Year 1 actually took place earlier. If anything, new cars are better businesses for Vicom.

Thanks for your clarifications.

(13-02-2014, 09:05 AM)yeokiwi Wrote:

(13-02-2014, 08:45 AM)opmi Wrote: If you look at COE supply over time, it is cyclical. And we are at peak or past peak.

http://www.lta.gov.sg/content/dam/ltaweb...3M-Age.pdf
http://www.lta.gov.sg/content/dam/ltaweb...h_Insp.pdf

From the data so far, the best is yet to be (at least for another year....)

Looking at the data. The best way for Vicom to increase profits without increasing fee is to tighten 1st inspection to fail people. Hahahaa..

(13-02-2014, 09:51 AM)opmi Wrote:

(13-02-2014, 09:05 AM)yeokiwi Wrote:

(13-02-2014, 08:45 AM)opmi Wrote: If you look at COE supply over time, it is cyclical. And we are at peak or past peak.

http://www.lta.gov.sg/content/dam/ltaweb...3M-Age.pdf
http://www.lta.gov.sg/content/dam/ltaweb...h_Insp.pdf

From the data so far, the best is yet to be (at least for another year....)

Looking at the data. The best way for Vicom to increase profits without increasing fee is to tighten 1st inspection to fail people. Hahahaa..

A friend told me that if the 1st inspection fail, you just need to rectify the failed areas and go back for a 2nd inspection on the same day, and it will be FOC. Can anyone confirm this? The guy who told me this is driving a commercial van, so not sure if the same apply to pte vehicles.