Thursday, June 30, 2016

Added: VICOM Limited

Added 2700 shares of VICOM today at $5.75/units.
In total, I have 4,700 VICOM shares now :)

1) VICOM have zero debt and is sitting on $107.4million in cash as of Q12016 (A cash rich company)
2) VICOM paid out bi-yearly dividend. Expecting Aug16 dividend to be at least $0.0875/shares (1.5% of dividend upcoming based on $5.75/units)
3) VICOM take good care of their shareholders (well, they can afford too). Even though Revenue for Q22016 is likely to be lower YoY, but I don't expect them to dish out lower than $0.0875/shares dividend in Aug16. As per their past track record, their dividend have been increasing YoY even though there is a slight slip in revenue in 2015 thanks to their huge cash reserve and zero debt status. My guess will be $0.1025/shares of dividend to make Total Dividend per share at $0.30 for 2016.
4) Current price of $5.75 is quite close to their 52wks low ($5.69). Market had already priced in for the expected lower Revenue in 2016.
5) Daily trade volume is not high. Therefore, you wont see huge swing in stock price even in STI bull/bear (Stable stock for Keep Cool & Collect Dividend).
6) Satellite-based ERP to be ready by 2020. All cars will need to replace their existing In-Vehicle Unit (IU) to new On-Board Unit (OBU). The Gov will fit the one-time IU replacement cost. $$$$$$ for VICOM in the pipeline (Good for those long term shareholder) Source
7) VICOM have not increase their inspection fees since 2006 . Should they increase it, additional revenue can hold off the decrease in the number of registered cars which is currently at a five year low at the end of 2015 Source 
8) No matters how worst SG economy is, our dear LTA will send customers to VICOM automatically as it is mandatory by laws for all vehicle to be inspected
9) In current looming economic and high COE price, public car park charges to increase from Dec 2016. The last revision of parking charges was in 2002, 14 years ago. This add on additional already heavy burden to car owners which might let them think of getting an old car (3 years onward) instead of brand new car. Source

1 comment:

  1. Hi, just my personal opinion on Vicom.

    Vicom share price drop was due to consecutive declining profits.

    Vicom is currently hit on two major fronts. Its vehicle testing and inspection segment experiencing a downturn due to a high number of vehicle deregistration from 2015 onwards. I have previously written about it here.

    Its non-vehicle testing and inspection segment, SETSCO, is also experiencing headwinds as the industries they serve are experiencing a continued slowdown, especially in the petrochemical, oil and gas sector.

    We also know that government aims to be a “car-lite” society, reducing cars and improving accessibility via public transport.

    If we refer to LTA's publications, you will notice that deregistration was more than registration of cars since 2014.

    What we see is, old cars being on the road longer than usual (high COE and Uber effect) and lesser number of cars.

    But net net in the short run, we will see lesser cars than last year needing inspection, hence revenue falls.

    The figures can be found here.

    Let me know if I had missed something. Happy to hear alternate views to have a holistic picture of the company.