HupSteel

[Bibi]

Hupsteel's dividend is quite decent at 4.9% (1 cent / 20.5 cents), but I guess depending on your yardstick, there are of course better yields but not necessarily at the same level of comfort offered by Hupsteel.

What comfort? I say, (a) long track dividend paying track record, including bad market cycles, (b) level of cash on books, © negligible debts.

Hupsteel dividend is not sustainable at 1 cent based on current eps. Past few years suggest it has never given dividend more than its eps can sustain. Yr 2013 is the only exception. And this year 2nd half it did not announce any dividend.

[brattzz]

think still got plenty of opportunities to buy, so wait and see bah..

[investright]

Just a curious accounting question: If the company were to report their investment properties based on the current market value (is it permissible in the first place to state them at market value instead of cost in the balance sheet?), wouldn't it incur higher depreciation charge which may have the effect of decreased earnings?

[valuebuddies]

Just a curious accounting question: If the company were to report their investment properties based on the current market value (is it permissible in the first place to state them at market value instead of cost in the balance sheet?), wouldn't it incur higher depreciation charge which may have the effect of decreased earnings?

I am not sure about Hupsteel, but factories and manufacturing sites should not be classified as investment properties in the first place. If Hupsteel do have some vacant land or properties that being leased out, Hupsteel should have considered them as investment properties.

Under FRS 40, investment properties can be recognised under the following methods:

Fair Value Approach
The investment properties should be assessed yearly to determine the fair value of the properties and to account for any fair value gain/loss

Cost Approach
This is a more prudent method. Similar to PPE, it is a "cost less depreciation/impairment" approach. But entity who adopted this approach should also disclose the fair value of the investment properties.

So to answer your question, if Hupsteel do have investment properties and would like to adopt the fair value approach, there should not be any depreciation charge.

[FatBoi]

Just a curious accounting question: If the company were to report their investment properties based on the current market value (is it permissible in the first place to state them at market value instead of cost in the balance sheet?), wouldn't it incur higher depreciation charge which may have the effect of decreased earnings?

I am not sure about Hupsteel, but factories and manufacturing sites should not be classified as investment properties in the first place. If Hupsteel do have some vacant land or properties that being leased out, Hupsteel should have considered them as investment properties.

Under FRS 40, investment properties can be recognised under the following methods:

Fair Value Approach
The investment properties should be assessed yearly to determine the fair value of the properties and to account for any fair value gain/loss

Cost Approach
This is a more prudent method. Similar to PPE, it is a "cost less depreciation/impairment" approach. But entity who adopted this approach should also disclose the fair value of the investment properties.

So to answer your question, if Hupsteel do have investment properties and would like to adopt the fair value approach, there should not be any depreciation charge.

Hupsteel applied cost approach for their investment properties since day 1, so can't suka suka change to valuation method going forward. This applies to redevelopment of any freehold properties currently classified as PPE and will be reclassified to Investment properties, and also applies to existing investment properties plus as any new investment properties they buy next time.

[brattzz]

looking forward to 3Q reporting and hopefully 0.5cts dividends:!! not sure will happen or not?!

[FatBoi]

looking forward to 3Q reporting and hopefully 0.5cts dividends:!! not sure will happen or not?!

IMHO, good chance.

Last year 9 months FY13 EPS were 0.25 cents per share and they declared 0.5 cents dividends.

Currently half year FY14 EPS at 0.29 cents, already exceeds that of 9 months last FY.

The reason why they can do this is the huge cash balance on their books. And the cash is not fuelled by borrowings.

[brattzz]

Thanks FatBoi, noticed a bit of consistent 200 -300 lots exchanging hands over the past few weeks, providing support at 20.5cts +/-...

Wait for good news!

[Curiousparty]

Hupsteel's dividend is not sustainable at 1 cents. Probably, 0.5 cents max. So, sustainable dividend yield is at max 2.5%.

Since the dividend from hupsteel is not that much, and the steel market is now pretty much collapsing in China from overproduction, it will take some time for the global market to soak up all that excess capacity.

Looks like tough times still ahead for steel and commodities industry.

I will keep on my radar though, and start buy in at a cheaper price, or unless some good news that increases trading volume and starts moving this counter.

Hupsteel's dividend is quite decent at 4.9% (1 cent / 20.5 cents), but I guess depending on your yardstick, there are of course better yields but not necessarily at the same level of comfort offered by Hupsteel.

What comfort? I say, (a) long track dividend paying track record, including bad market cycles, (b) level of cash on books, © negligible debts.

P/E not great but the current price appears to be well-supported. I may load up on further price drops.

[investright]

Hupsteel's dividend is not sustainable at 1 cents. Probably, 0.5 cents max. So, sustainable dividend yield is at max 2.5%.

Since the dividend from hupsteel is not that much, and the steel market is now pretty much collapsing in China from overproduction, it will take some time for the global market to soak up all that excess capacity.

Looks like tough times still ahead for steel and commodities industry.

I will keep on my radar though, and start buy in at a cheaper price, or unless some good news that increases trading volume and starts moving this counter.

Hupsteel's dividend is quite decent at 4.9% (1 cent / 20.5 cents), but I guess depending on your yardstick, there are of course better yields but not necessarily at the same level of comfort offered by Hupsteel.

What comfort? I say, (a) long track dividend paying track record, including bad market cycles, (b) level of cash on books, © negligible debts.

P/E not great but the current price appears to be well-supported. I may load up on further price drops.

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?