VICOM

[Musicwhiz]

A reduction in the growth of car population should be relatively bad for Vicom compared to if growth had been kept the same.

More cars = more inspections
Less cars = less inspections

While 1.5% growth is still positive to Vicom, it is not as positive if let's say growth were allowed at 5%. In other words, Vicom would be better if this cap has not been implemented. So this is actually bad news and not good news.

It may be better to also look at the perspective of Older Cars = More Frequent Inspections. Seeing that VICOM has the lion's share of the inspection market, this also means that they have the power to raise prices to cope with inflation.

While I do agree that more cars would mean more inspections, if we look at the age profile of cars, most are getting older as people are less and less likely to scrap them for new ones. Correct me if I am wrong, but as a car gets older it would need more frequent inspections (I am not a driver, so this is just my understanding).

Thanks.

[cif5000]

A reduction in the growth of car population should be relatively bad for Vicom compared to if growth had been kept the same.

More cars = more inspections
Less cars = less inspections

While 1.5% growth is still positive to Vicom, it is not as positive if let's say growth were allowed at 5%. In other words, Vicom would be better if this cap has not been implemented. So this is actually bad news and not good news.

It may be better to also look at the perspective of Older Cars = More Frequent Inspections. Seeing that VICOM has the lion's share of the inspection market, this also means that they have the power to raise prices to cope with inflation.

While I do agree that more cars would mean more inspections, if we look at the age profile of cars, most are getting older as people are less and less likely to scrap them for new ones. Correct me if I am wrong, but as a car gets older it would need more frequent inspections (I am not a driver, so this is just my understanding).

Thanks.

1. First, let's agree that a lower growth rate is actually bad news for Vicom.

2. Older cars = more frequent inspection?
The way I see it, the number of inspections a car has to make is fixed over its lifetime (because COE = 10 yr). The proportion of cars > 3yr will normalize (read d.o.g. previous post) eventually.

3. More cars are getting older?
All cars are getting older everyday. More cars are getting older primarily because there are more cars to begin with.

Obvious aside, according to LTA stats, the number of cars entering mandatory inspection will decrease in the next few years compared to the previous years.

[Musicwhiz]

1. First, let's agree that a lower growth rate is actually bad news for Vicom.

2. Older cars = more frequent inspection?
The way I see it, the number of inspections a car has to make is fixed over its lifetime (because COE = 10 yr). The proportion of cars > 3yr will normalize (read d.o.g. previous post) eventually.

3. More cars are getting older?
All cars are getting older everyday. More cars are getting older primarily because there are more cars to begin with.

Obvious aside, according to LTA stats, the number of cars entering mandatory inspection will decrease in the next few years compared to the previous years.

Thanks for your points. An engaging discussion indeed!

Agree that a lower growth rate means less cars on the roads in future years.

I guess with the evidence you presented, it may mean VICOM has hit a "plateau" with respect to number of inspections. I guess the way forward for them to make more revenues and profits is to increase the price per inspection, or to focus more resources on building up their non-vehicular inspection arm.

[Drizzt]

correct me if i am wrong but setsco does form an important portion of net profit

[Nick]

2/3 of revenue comes from SETSCO...time for investors to move away from looking at its veh business alone. The key question is whether can SETSCO continue to derive such revenue when the construction and manufacturing boom starts to fade away ?

(Vested)

[Musicwhiz]

2/3 of revenue comes from SETSCO...time for investors to move away from looking at its veh business alone. The key question is whether can SETSCO continue to derive such revenue when the construction and manufacturing boom starts to fade away ?

(Vested)

SETSCO set up a 49%-JV in the Middle East. As at Dec 31, 2010 (FY 2010), it had not contributed any revenues or net profits. I wonder how the setup is doing now. Hope VICOM can give some updates on this in their 3Q 2011 results.

[freedom]

if recession hits hard and COE drops drastically, the number of new cars will decrease considerably. the number of old cars will decrease significantly as well because of lower COE. actually it would be double whammy for VICOM's vehicle business.

[yeokiwi]

if recession hits hard and COE drops drastically, the number of new cars will decrease considerably. the number of old cars will decrease significantly as well because of lower COE. actually it would be double whammy for VICOM's vehicle business.

if recession hits hard and COE drops drastically, the number of new cars will decrease considerably.

The supply is fixed and the demand is high.
I strain my eyes and I think the vehicle population is only going in one direction from 1975 to 2006.(at least 3 recessions in between.. 1985,1998,2001)
http://www.springerimages.com/Images/Eco...7-9115-y-0

$1 COE?? Even the students will chiong the car showroom.

[freedom]

if recession hits hard and COE drops drastically, the number of new cars will decrease considerably. the number of old cars will decrease significantly as well because of lower COE. actually it would be double whammy for VICOM's vehicle business.

if recession hits hard and COE drops drastically, the number of new cars will decrease considerably.

The supply is fixed and the demand is high.
I strain my eyes and I think the vehicle population is only going in one direction from 1975 to 2006.(at least 3 recessions in between.. 1985,1998,2001)
http://www.springerimages.com/Images/Eco...7-9115-y-0

$1 COE?? Even the students will chiong the car showroom.

from 1975 to 2006, the roads has improved greatly to support increasing car population and the population growth also helps a lot.

from 2011 on, according to the transport minister, probably, the roads will not improve that much. the population growth probably would slow down quite significantly.

both growth engines for car population is not optimistic.

[yeokiwi]

from 1975 to 2006, the roads has improved greatly to support increasing car population and the population growth also helps a lot.

from 2011 on, according to the transport minister, probably, the roads will not improve that much. the population growth probably would slow down quite significantly.

both growth engines for car population is not optimistic.

Goal post is shifted. Like that how to score...