VICOM

Thread Rating:
  • 2 Vote(s) - 5 Average
  • 1
  • 2
  • 3
  • 4
  • 5
The Straits Times
www.straitstimes.com
Published on Jan 07, 2013
Sharp rise in older cars amid high COE prices

Just 28% of cars here less than four years old, against 80% back in 2007

By Christopher Tan senior correspondent

SOARING certificate of entitlement (COE) prices have compelled car owners to hang on to their rides longer, given the hefty cost of switching to a new model.

The result is that Singapore's car population has aged dramatically in recent years.

Back in 2007, 80 per cent of the cars on the road were less than four years old. Today, the cohort has shrunk to 28 per cent.

COE premiums are now hovering at $82,000 (for cars up to 1,600cc) and $95,000 (above 1,600cc). In 2007, they were about $14,000 and $18,000, respectively.

Premiums have spiked because the supply of car COEs - needed for the purchase of new vehicles - has shrunk from more than 100,000 in 2007 to around 27,000 last year.

Property agent Ben Ong, 61, who owns a six-year-old Nissan Latio, is among drivers who find new cars getting beyond their reach.

"I'm forced to keep it," he said. "If COE had been lower, I would have scrapped it and bought a new car."

Another car owner, retired engineer Lee Kok Meng, 56, had been looking to replace his nine-year-old Toyota Camry since last year. But because of high COE prices, he opted recently for a seven-year-old Lexus ES300.

The net result is that 65 per cent of cars here are now between four and eight years old, compared with just 13 per cent in 2007.

But not everybody is complaining. Vehicle-inspection centres are enjoying brisk business.

"As COE prices continue to climb, the number of car deregistrations every month continues to fall," said a spokesman for Vicom, the largest vehicle-inspection company here.

"This will mean an increase in the number of older cars on the road requiring annual inspections. This has been happening and we expect it will continue to happen in the months ahead."


Cars that are three to 10 years old must be certified roadworthy every two years, while older cars must be inspected annually.

The Automobile Association of Singapore is also ramping up its highway recovery services to cope with more breakdowns.

Singapore Motor Workshop Association president Joey Lim said "business is pretty good now because people are keeping their cars longer".

His own workshop, Harmony Motor, has been getting more repair, maintenance and part- replacement jobs.

But he fears circumstances may swing the other way a few years down the road.

"Come 2015, there will be another flood of COEs and premiums might plunge," he said.

Many cars will be reaching the end of their 10-year COE lifespan then. This, he said, will trigger another deluge of cars being scrapped and fewer repair jobs.

Like many in the motor trade, Mr Lim said there should be a more stable supply of COEs to prevent price fluctuations.

Retired engineer Mr Lee concurs. "They need to tweak the allocation of COEs to address the wide swing in premiums."

One way, he suggested, is to divide the car population by 10 to arrive at an average annual supply. Otherwise, there will always be peaks and troughs in the system.

Property agent Mr Ong noted: "High COE prices do not control car population growth - having a quota system already does that."

Meanwhile, Singapore is not the only place where cars are ageing. In the United States, the average age rose from 10.4 years in 2007 to 11.1 years in 2011 - largely because of the severe financial crisis in 2008.

In Japan, the average age has climbed to 6.8 years from 5.1 years over the past decade on the back of its prolonged recession.

christan@sph.com.sg


Attached Files
.pdf   Age of Cars - Jan 7, 2013.pdf (Size: 655.52 KB / Downloads: 11)
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Reply
If anyone interested in digging out the primary data, you can find the data on LTA webby. The website also got breakdown by makes..

Take a look at the registration of bentley, maserati, ferrari and lambos in 2012..

http://www.lta.gov.sg/content/dam/ltaweb...y_make.pdf

Year:
http://www.lta.gov.sg/content/dam/ltaweb...3M-Age.pdf
Reply
I wonder if the inspections for maserati, ferrari and lambos are the same as other cars? Personally, I prefer fast cars to undergo additional inspections related to the high speed they can be driven at.[/quote]
Reply
Note that VICOM will be releasing its FY 2012 results on February 6, 2013 (Wednesday).

Last year's final dividend was 7.5c/share while a special dividend of 3.2c/share was declared, bringing the total to 10.7c/share. I would expect a higher final dividend of about 8c/share for FY 2012, and probably no special dividend for prudence. (Note: FY 2012 interim dividend was 7.5c/share, up from FY 2011's interim dividend of 6.9c/share).
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Reply
Dividend is same as last year's.
Reply
Could have paid more with more cash in their balance sheet.

Cash flow is flattish and NPM dropped for the first time (down 0.46% from previous year) but it's too small to be a cause for concern.
Visit my personal investing blog at http://financiallyfreenow.wordpress.com now!
Reply
(06-02-2013, 08:07 PM)FFNow Wrote: Could have paid more with more cash in their balance sheet.

Cash flow is flattish and NPM dropped for the first time (down 0.46% from previous year) but it's too small to be a cause for concern.

Why don't they pay out more of their cash? Was a bit puzzled that dividend remained exactly the same. Are they preparing their cash hoard for M&A?

FCF for FY 2012 was about $26m, while dividends for full-year amounted to about $16m, therefore the cash should increase by about $10m a year.

Let's wait and see what happens....
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Reply
(06-02-2013, 08:57 PM)Musicwhiz Wrote:
(06-02-2013, 08:07 PM)FFNow Wrote: Could have paid more with more cash in their balance sheet.

Cash flow is flattish and NPM dropped for the first time (down 0.46% from previous year) but it's too small to be a cause for concern.

Why don't they pay out more of their cash? Was a bit puzzled that dividend remained exactly the same. Are they preparing their cash hoard for M&A?

FCF for FY 2012 was about $26m, while dividends for full-year amounted to about $16m, therefore the cash should increase by about $10m a year.

Let's wait and see what happens....

Without much info available in its website & no material announcements after the full year FY12 results, what can you tell from the price weaknesses in Vicom of late?
Reply
(10-05-2013, 06:53 AM)myleekc Wrote: Without much info available in its website & no material announcements after the full year FY12 results, what can you tell from the price weaknesses in Vicom of late?

What "price weakness" are you referring to?

VICOM releases its results for 1Q 2013 this evening; maybe you can review it first before discussing more on the Company?

Thanks.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Reply
(10-05-2013, 06:53 AM)myleekc Wrote:
(06-02-2013, 08:57 PM)Musicwhiz Wrote:
(06-02-2013, 08:07 PM)FFNow Wrote: Could have paid more with more cash in their balance sheet.

Cash flow is flattish and NPM dropped for the first time (down 0.46% from previous year) but it's too small to be a cause for concern.

Why don't they pay out more of their cash? Was a bit puzzled that dividend remained exactly the same. Are they preparing their cash hoard for M&A?

FCF for FY 2012 was about $26m, while dividends for full-year amounted to about $16m, therefore the cash should increase by about $10m a year.

Let's wait and see what happens....

Without much info available in its website & no material announcements after the full year FY12 results, what can you tell from the price weaknesses in Vicom of late?

Dude... Why the pessimism? I see the glass as half full. No news is good news man...

May I know are there other external indications that will point to Vicom's business going down south?

To tell you frankly, I will buy more of Vicom's share if the price drops man... Why would I stop buying my favorite burger just because it's price is 50% cheaper today than yesterday. Should not I buy more?

All that being said, the burger story must still stay the same or do better for me to buy more.

(Vested)
www.joetojones.com - Helping the average Joe find the winning companies to invest in.
Reply


Forum Jump:


Users browsing this thread: 10 Guest(s)