Popular Holdings

[karlmarx]

I'm puzzled at the market's valuation of popular. It has a long history of profitability and FCF. It has little debt. There is succession in its management. It is the only player of its kind in the (singapore) market. There are no foreseeable macro issues that may affect its business in particular.

Their foray into property development probably rose doubts on their business direction. Currently, the move appears to be opportunistic. and i'm glad they haven't been trying to bid for land at current prices.

Trading at 70 cents on a dollar of book value, and approx 4.5 times earnings, the market seems to suggest that popular's business is declining.

but i see a good business, adequate management, and low valuation. i wonder if people here feel the same?

[Thriftville]

I have a friend in this line. According to him, Popular is in a very competitive business. The school textbooks sold at Popular is at very thin margin (or even at a lost), in order to attract parents to visit the stores to buy other higher margin items like stationery. This could probably be the reason why they choose to go into property for better returns?

[dydx]

Popular's FY11 (ended 30Apr11) full-year results (first released on 24Jun11, last Friday) makes interesting reading...
http://info.sgx.com/webcoranncatth.nsf/V...9003C5DBB/$file/SGX_Announcement_30April2011.pdf?openelement [results announcement]
http://info.sgx.com/webcoranncatth.nsf/V...9003AE07B/$file/PopularPressReleaseFY11ENG.pdf?openelement [press release]

While FY11's PBT and NP at group level are both down - chiefly due to a much lower $6.475m write-back of impairment for
development properties, vs. $21.684m in FY10 - the underlying total earnings at PBT level for the 2 core Retail &
Distribution and Publishing/e-Learning divisions have registered a solid 53.9% y-o-y increase or improvement, and this positive trend appears quite sustainable. With the remaining units in the completed "18 Shelford" condo project selling, the Property Development division should bring in a few million dollars of extra profits in FY12.

A Final dividend of $0.006/share declared, making a total payout of $0.01/share for FY11.

Based on sustaining profitability at group level and a solid B/S with an increasing nett cash reserve, there is really no reason why Popular should be trading at such a large discount from its latest (as at 30Apr11) NAV/share of $0.2268. By rational thinking, Mr Market should be quite willing to price Popular at a decent premium over its corresponding NAV/share. A relevant question: Would this happen any soon?

[violinist]

Just last weekend I was at the Marine Parade branch, and was surprised to see 2 queues at both cashiers each about 25-30 customers! Apparently there was some kind of discount, but the speed at which they process the sale is really slow. It took us more than 30 minutes to queue up and pay. That is one of the frustrations both as a customer and a shareholder.

[dydx]

The June school holidays in Singapore is a time for students to replenish their stationery supplies and to buy assessment books to prepare for the coming class tests and common exams in the second semester. It is also a time to buy some story books and games to kill time during the one-month break. As nearly all households with school-going children patronize Popular bookstores island-wide, I suppose occasional queues are inevitable. You can also try shopping from Popular on-line....
https://www.popular.com.sg/jsp/index.jsp

All the business volume booked during the busy June school holidays will be reflected in Popular's Q1 (ending 31Jul11) results available by 15Sep11.

[dydx]

I am pleasantly surprised to note that Kim Eng actually wrote a one-page report (dated 16Jun11, p3) on Popular and even labelled the counter a 'HOT STOCK'....
http://www.remisiers.org/cms_images/KE_-...sideup.pdf

For sure, the analyst has good foresight, as the report actually came out before Popular released a set of pretty good full-year operating results for FY11 (ended 30Apr11) on 29Jun11.

[karlmarx]

i wouldn't say it's a hot stock, going by the price movements. but i would certainly call it an undervalued stock. although they reported less earning than the previous year, there was actually a substantial increase in earnings from their core business. earnings from property development is negligible (less than $1mio?) for the latest FY. to me, this is a better set of results than the previous year, which had its earnings bolstered by property development. considering their ~10% roe, .07 p/b, 0.1 gearing, low capex, lack of competitors , and the stability of their core business, i'm of the opinion that this is one of the most undervalued stock on sgx. if the chou family decide to take it private, they would be paying a very cheap price. if i'm not mistaken, they IPOed at about 12x earnings.

[lonewolf]

Of all the stocks in my portfolio, I called Popular my 'won't starve but can't get fat stock'.

I have this share since its IPO (36c in 1997) and it has given out dividends every single year since its listing. They carried out 2 rights issue in 2009 and 2010.

My current yield for the stock is 1.84% p.a. (capital gain) and 3.66% (inclusive of dividend). The average dividend yield based on my average price is ard 8%.

[Drizzt]

why did popular fall so much since 30++ cents?

[karlmarx]

i think mostly due to the two rights issue recently. and also, ever since they started going into property development it has created unease among investors. like when wilmar went into property last year. i have no doubt that popular is better off without its property division. afterall, they have a good core business, right?