27-08-2016, 01:20 AM
Vicom Limited recently released its second-quarter earnings. The reporting period was for 1 April 2016 to 30 June 2016.
Revenue for the second quarter was $25.4 million, down 6.9% from the same quarter a year ago. Net profit attributable to shareholders also fell by 12.6% year-on-year to $6.6 million. Earnings per share was 7.47 cents in the reporting quarter, down 12.6% from the 8.55 cents recorded in the same quarter last year.
On a positive side, cash flow from operations came in at $6.5 million while capital expenditure (capex) was around $1.1 million. This provided Vicom with $5.5 million in free cash flow.
As of 30 June 2016, Vicom had $95.8 million in cash and equivalents and no debt. This is a decrease from the net cash balance of $100 million recorded at the end of last year.
Referencing LTA's monthly deregistration data, I note that for the full year of 2015, 100,859 cars deregistered. For the six months in 2016, close to 70,000 cars were deregisterd. Noticed that the total deregistration for the first 6 months was 70% of the total number of vehicles deregistered last year? In fact, the deregistration of the vehicles was higher in each of the month this year than last.
Also, I observed that more cars deregistered then registered since 2014.
Year New Registrations Vehicles De-registered
2014 55, 588 57,721
2015 86,068 100,859
2016 (Jan – Jul) 69,623 71,950
Taking LTA’s Jul 16 age distribution of motor vehicles, 46.2% of the 599,740 cars require inspection. This means that about 277,079 cars require inspection for the year of 2016. This results in a 5.5% drop in the total number of cars inspected, from the estimated 293,371 total cars inspected last year.
[Image: vicom-inspection-vehicle-projection.jpg]
The macroeconomic view of Vicom is slightly gloomy, with headwinds from both the government’s car-lite policies (long-term) and the higher deregistration of vehicles compared to registration (short-term: 2-3 years). Hence a drop in net profit in the short term wouldn’t be a surprise. However, the business is cyclical, which means that it will pick up once the up cycle swings in. Vicom has a strong and honest management and they are exploring all means to improve shareholder’s returns. It is worth monitoring Vicom’s key data for the fundamental inflection point.
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Financial Freedom can be achieved through prudence and patience capital.
http://www.bytesizedinvestments.com/
Revenue for the second quarter was $25.4 million, down 6.9% from the same quarter a year ago. Net profit attributable to shareholders also fell by 12.6% year-on-year to $6.6 million. Earnings per share was 7.47 cents in the reporting quarter, down 12.6% from the 8.55 cents recorded in the same quarter last year.
On a positive side, cash flow from operations came in at $6.5 million while capital expenditure (capex) was around $1.1 million. This provided Vicom with $5.5 million in free cash flow.
As of 30 June 2016, Vicom had $95.8 million in cash and equivalents and no debt. This is a decrease from the net cash balance of $100 million recorded at the end of last year.
Referencing LTA's monthly deregistration data, I note that for the full year of 2015, 100,859 cars deregistered. For the six months in 2016, close to 70,000 cars were deregisterd. Noticed that the total deregistration for the first 6 months was 70% of the total number of vehicles deregistered last year? In fact, the deregistration of the vehicles was higher in each of the month this year than last.
Also, I observed that more cars deregistered then registered since 2014.
Year New Registrations Vehicles De-registered
2014 55, 588 57,721
2015 86,068 100,859
2016 (Jan – Jul) 69,623 71,950
Taking LTA’s Jul 16 age distribution of motor vehicles, 46.2% of the 599,740 cars require inspection. This means that about 277,079 cars require inspection for the year of 2016. This results in a 5.5% drop in the total number of cars inspected, from the estimated 293,371 total cars inspected last year.
[Image: vicom-inspection-vehicle-projection.jpg]
The macroeconomic view of Vicom is slightly gloomy, with headwinds from both the government’s car-lite policies (long-term) and the higher deregistration of vehicles compared to registration (short-term: 2-3 years). Hence a drop in net profit in the short term wouldn’t be a surprise. However, the business is cyclical, which means that it will pick up once the up cycle swings in. Vicom has a strong and honest management and they are exploring all means to improve shareholder’s returns. It is worth monitoring Vicom’s key data for the fundamental inflection point.
_________________________________
Financial Freedom can be achieved through prudence and patience capital.
http://www.bytesizedinvestments.com/