VICOM

[hailstorm87]

Just reproducing the Group Outlook statement:  "Business conditions are expected to remain difficult for both the vehicle and non-vehicle testing businesses. The vehicle testing business will continue to face challenges posed by the high de-registration rate although this will be offset partially by an increase in the number of Certificate of Entitlement (COE) revalidations. The non-vehicle testing business will continue to weaken with the general slowdown in the industries that we serve."

I think that this substantially helps with ameliorating the effects of the deregistration moving forwards since the inspection schedule for revalidated COEs (i.e. extension of COEs) will yield greater yields (cars are reinspected annually instead of biannually). 

Cross referencing this to the LTA site: cars with more than 10 years doubled in about a year from 22,671 (in 31 Jan 2016) to 48,130 (31 Dec 2016) - or 3.77% to 8% of the total vehicle population.  (source: https://www.lta.gov.sg/content/dam/ltawe...3M-Age.pdf) 

(vested)

[cyclone]

Today's Closing Price is SGD 5.690 per share.

Financial Results for Second Quarter ("2Q17") and Half Year ended 30 June 2017

1. The Group's total revenue of $24.1 million for 2Q17 was $1.3 million or 5.2% lower than 2Q16 due to lower business volumes
2. The Group’s operating costs of $17.1 million for 2Q17 were $0.8 million or 4.4% lower than 2Q16, in tandem with the lower business volumes
3. The Group’s operating profit of $7.0 million for 2Q17 was $0.5 million or 7.2% lower than 2Q16
4. The Group’s Profit attributable to Shareholders of the Company of $6.1 million for 2Q17 was $0.6 million or 8.3% lower than 2Q16
5. The net cash outflow in 2Q17 was $10.6 million after payment of dividends
6. Net asset value per share as at 30 June 2017 was SGD 1.65
7. Vicom declared interim dividend of SGD 0.1312 per share versus SGD 0.08 per share a year ago.

More details in http://infopub.sgx.com/FileOpen/VICOM_2Q...eID=465802

[opmi]

To add:

17 DIVIDEND
(a) Current Financial Period Reported On
The Directors are pleased to declare a tax-exempt one-tier interim dividend of 13.12 cents (2016: 8.00
cents) per ordinary share.
Name of Dividend Interim
Dividend Type Cash; Tax-exempt one-tier
Dividend Amount per ordinary share 13.12 cents
Tax Rate Exempt one-tier
The Directors are pleased to announce with immediate effect that the dividend policy has been revised
to a payout ratio of 90% of Net Profit attributable to Shareholders from the previous policy of 50%.

Need more money to fight Grab? Hahaha

[weijian]

The Directors are pleased to announce with immediate effect that the dividend policy has been revised
to a payout ratio of 90% of Net Profit attributable to Shareholders from the previous policy of 50%.

Need more money to fight Grab? Hahaha

Despite having a dividend policy of "at least 50% of NP", VICOM has actually been exceeding that (by a large margin) for a couple of years now. Its avg dividend payout ratio as % of NP has been ~80% avg for last 3 years. Cash has been accumulating on the BS steadily. In end 2010, it was ~49mil and by end of this quarter closing, it is ~100mil.

With its strong FCF generation capability,adhering to payout ratio of 90% will continue to accumulate cash on the BS - So, will it actually pay out >100% of NP/FCF via special dividends for its parent to fight the war?

[brattzz]

Parent CD needs the cash inflow to beef up it's book, it's a long drawn fight and UBER/GRAB has got tons to burn! :O

[CY09]

http://infopub.sgx.com/FileOpen/VICOM_FY...eID=488445

Despite a lower profit and cash generation ability falling by approx 10% year on year, Vicom has announced a huge 22.88 cents dividends. This equates to a payout of about 20.3 mil cash.

Vicom's cash flow and balance sheet can definitely sustain this continuous high dividends. I will not be surprised if Vicom will continue to maintain annual dividend payout of 33-34 cents per share. After all, its parent company, CDG is also in need of cash.

At current price of $5.83, Vicom is definitely a good dividend stock to own. A balance sheet which is not leveraged, a business capable of generating 6.1% cashflow yield based on current price, it is better than our teleco stocks (highly geared and producing only about the same yield as Vicom)

[vingaard]

Agree that this is a good dividend stock to own.

Pros: Near monopolistic power on vehicle inspection.

Cons: Zero growth in vehicle population. So do not expect capital appreciation.

Vested (my biggest holding)

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[Temperament]

Looking forward 5 to 10 years what will happens if all or almost all vehicles are EV.

How much can Vicom charges for inspecting EVs?

Surely not the same amount as present because there are really not much things to check for an EV.

Maybe i am wrong in my understanding.

Am i?

[vingaard]

Good point there. Perhaps given the risk of battery explosions, Vicom's inspections would focus on the battery? Just speculation but I'm sure there must be some checks even for EVs.

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[BlueKelah]

@Temperament : I do not think things would differ in a big way for EV.

Inspection for Petrol-driven Vehicles
http://www.vicom.com.sg/Our-Services/Veh...n-Vehicles..

The two test below might be not applicable for EV.
Exhaust Emission Test:
Checks exhaust emission level of petrol driven vehicles.
A probe is inserted into the exhaust pipe to collect gas sample for measurement.

Sound Level Test
The engine is revved and noise emission is measured to determine noise level.

the other common tests for lights/wheels/brakes should all apply.

And of course as mentioned likely a more comprehensive testing for the Battery component may be developed (yes this might be an excuse for them to increase the price, so it might end up cost more for EV owners and more profit for VICOM). Hybrid car owners should have an idea of what other specific tests done for battery/charging system??

VICOM will probably be a good long term hold for passive dividend portfolio. IMO, during a market correction/crash, would prefer to pick up something like ST Engineering