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21-04-2014, 10:16 AM
(This post was last modified: 21-04-2014, 10:17 AM by brattzz.)
"It will probably be a slightly different story if the company has:
1) a huge cash reserves that is much more than the working capital needs
2) improvements in the general industry which will bring about increase in the earnings for dividends
3) improvements in alternative sources of income which are recurring in nature
Seems that Hupsteel have the above three factors in place. The question is really to what extent does these help to make the distribution of dividends more sustainable. One point to note is that the company has quite a consistent history of distributing dividends since many years back and also the management are themselves substantial shareholders.
What do you guys think?" - investright
Thanks! that's what i thought too. 
Family biz is conserative and being major-shareholders themselves, they will want to pay themselves!
Let see if our reasonings are valid!
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2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
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The core steel business is not sustainable. If not, the company will not be cutting dividend.
The company is just lucky in that it is holding onto freehold industrial land. that is all.
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
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(23-04-2014, 11:36 PM)Curiousparty Wrote: The core steel business is not sustainable. If not, the company will not be cutting dividend.
The company is just lucky in that it is holding onto freehold industrial land. that is all. Wow I didn't know this company can survive till now since 1941 despite it's business not sustainable. When do you think will be the demise of this company? Do you think cosco and noble also not sustainable because they have cut their dividend too? Maybe sgx also not sustainable.
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Not sustainable? Maybe? But HupSteel had 2 right issues and 2 bonus issues. If another right issue tomorrow, will the Market support?
Not vested till now.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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I do agree with the "not sustainable", i remember checking sometime back that the company is paying dividend more than what it earned. As to whether the business is sustainable or not, I have no comment because I can't predict what is going to happen tomorrow and days after. But at least as of now there is no indication that the business is not sustainable.
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Dividend is not sustainable for now. But it does not mean reduction in dividend means the business is not sustainable.
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(23-04-2014, 11:36 PM)Curiousparty Wrote: The core steel business is not sustainable. If not, the company will not be cutting dividend.
The company is just lucky in that it is holding onto freehold industrial land. that is all.
Actually has Hupsteel cut dividends? I missed it. Last year's interim dividend was declared in Q3 isn't it? Are we making a conclusion too early?
I like to think that sustainability of dividends need to be assessed on two fronts - existing cash levels, dividend payout ratio (where EPS comes in).
If I have 1 mil in my bank account, even if I am paid 1k in salary monthly, I can still service a loan repayment of 2k. So is my loan repayment sustainable?
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(24-04-2014, 06:49 PM)FatBoi Wrote: (23-04-2014, 11:36 PM)Curiousparty Wrote: The core steel business is not sustainable. If not, the company will not be cutting dividend.
The company is just lucky in that it is holding onto freehold industrial land. that is all.
Actually has Hupsteel cut dividends? I missed it. Last year's interim dividend was declared in Q3 isn't it? Are we making a conclusion too early?
I like to think that sustainability of dividends need to be assessed on two fronts - existing cash levels, dividend payout ratio (where EPS comes in).
If I have 1 mil in my bank account, even if I am paid 1k in salary monthly, I can still service a loan repayment of 2k. So is my loan repayment sustainable?
If im not wrong Hupsteel has maintained a dividend of 1cts most of the time every year. Not sure where the dividend cut mentioned came from. Also, I think its quite unfair to conclude that the company is 'just lucky' to have industrial freehold land. I think the fair thing to do is to ask is if the stock is undervalued at current market prices considering the company's profitability in existing business operations and the assets it is currently holding.
Would sincerely appreciate if someone can elaborate more regarding the past right issues and bonus issues. If the company would do the same thing again, what would be its consequences?
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(24-04-2014, 09:08 PM)investright Wrote: (24-04-2014, 06:49 PM)FatBoi Wrote: (23-04-2014, 11:36 PM)Curiousparty Wrote: The core steel business is not sustainable. If not, the company will not be cutting dividend.
The company is just lucky in that it is holding onto freehold industrial land. that is all.
Actually has Hupsteel cut dividends? I missed it. Last year's interim dividend was declared in Q3 isn't it? Are we making a conclusion too early?
I like to think that sustainability of dividends need to be assessed on two fronts - existing cash levels, dividend payout ratio (where EPS comes in).
If I have 1 mil in my bank account, even if I am paid 1k in salary monthly, I can still service a loan repayment of 2k. So is my loan repayment sustainable?
If im not wrong Hupsteel has maintained a dividend of 1cts most of the time every year. Not sure where the dividend cut mentioned came from. Also, I think its quite unfair to conclude that the company is 'just lucky' to have industrial freehold land. I think the fair thing to do is to ask is if the stock is undervalued at current market prices considering the company's profitability in existing business operations and the assets it is currently holding.
Would sincerely appreciate if someone can elaborate more regarding the past right issues and bonus issues. If the company would do the same thing again, what would be its consequences? Traditionally Hup has paid dividend in Q2 and Q4. When 2013Q2 dividend was not announced, its share price took a small hit compared to AEH which went up. I suspect management is testing the market on its share price. Knowing the consequence, they announced dividend on Q3 and Q4.
Now that Hup share price has held well and up slightly, will management try their luck again?
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27-04-2014, 05:02 PM
(This post was last modified: 27-04-2014, 10:30 PM by Curiousparty.)
IMHO, the payment of dividend is inextricably linked to the sustainability of business.
If business is stable and making good money, this will naturally translate into good cashflow. Then there will be sufficient cashflow to pay out sustainable dividend, without the need to keep going back to shareholders for money (e.g. rights issues, placement of shares, etc) which tend to benefit key shareholders, rather than minority ones.
If EPS continues to be so low and dividend payment exceeds EPS, this will reduce the net worth of NAV of company. this is not only unsustainable but also EXTREMELY detrimental if continued over the long term...
Any dividend cut sends a very strong signal that the current dividend payout of even a meagre of 1 cents per annum is not sustainable.
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
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