(02-09-2011, 12:27 PM)cif5000 Wrote: [ -> ]IMHO, at the current price range, the word "desperate" suits the buyers more than the sellers.
Fair enough, you are certainly entitled to your opinion, cif5000.
Buying at the current price implies a PER of about 12.2x and a yield of about 4%. Since we know VICOM has no debt on its Balance Sheet and has generated good FCF every year thus far, the business model should continue to lend itself to increased dividends year on year. Just my humble opinion, of course.
Since I am vested, you can probably discount some of my analysis.
(02-09-2011, 12:27 PM)cif5000 Wrote: [ -> ] (02-09-2011, 11:43 AM)Musicwhiz Wrote: [ -> ]There was a desperate seller who sold 1 lot to the buyer at $3.35, that's all.
IMHO, at the current price range, the word "desperate" suits the buyers more than the sellers.
.......like desperately shaking the tree to induce the fruit to detach?
is there any way to set my queue at xx price everyday besides doing it manually?
(02-09-2011, 05:04 PM)piggo Wrote: [ -> ]is there any way to set my queue at xx price everyday besides doing it manually?
You could ask your broker whether he can set it for you.
But otherwise, I don't think you can do so manually (i.e. set a recurring order daily at a specific price).
Will this piece of news affect VICOM negatively? Less cars on the road would imply less cars available for inspection....
(Vested)
The Straits Times
Sep 14, 2011
More old cars head for scrapyard
Rocketing COE prices have driven up the cost of extending lifespan of such cars
By Christopher Tan
MAKE-UP artist Agnes Lee is heartbroken that she has to scrap her 35-year-old Volkswagen Beetle 1303.
She says she has no choice. It will cost her $52,288 to renew her right to continue driving the car.
The sum is the prevailing quota premium (PQP), a three-month moving average of the cost of certificates of entitlement (COEs), which owners pay in order to drive the car for another 10 years. Since COE prices have been stratospheric lately, the PQP has shot north too.
Madam Lee, 38, said of the Beetle: 'It was the first big purchase with my husband when we got married. My daughter, when she was three, said she wanted to drive the car when she got old enough.
'She's 11 now and still remembers that... I really can't bear to scrap it.'
The PQP for her car is now at the highest in over a decade - and more than double the $20,000 she paid for the car at a used car shop in Bukit Timah in 1998.
'It's no longer economically viable to renew at today's price,' she sighed.
She is not the only one with an old set of wheels that she has to let go.
The Land Transport Authority (LTA) said the number of cars up to 1,600cc taken off the road last month nearly trebled to 3,780. Many were old cars that already had a lifespan extension in August 2001 - as did Madam Lee's Beetle - when the PQP was relatively low at $18,444.
Car enthusiasts reckon a sizeable number were Japanese cars built in the late 1980s, as well as collectibles such as Minis, Alfa Romeos and Volkswagen Beetles.
Classic car restorer David Chan, 66, observed that owners of rarer and higher-end models have mostly coughed up the PQP to keep their cars, despite the cost.
The alternative is to put their cars under the 'Classic Car Scheme', an option open to those whose cars are at least 35 years old.
These owners pay only 10 per cent of the PQP, but the catch is that they can use their cars for only 28 days each year.
Mr Chan said: 'These are people with three, four or more cars. In Singapore, there are many people like that.'
Individuals who need to use their cars more often but cannot or do not want to pay the PQP may pay for a five-, instead of a 10-year extension.
Senior technical trainer C. L. Ngai, 42, did just that. He paid $26,144 last month to extend the life of his 20-year-old but well-maintained Honda Civic by five years; the sum was a lot less than it would have cost him to buy another used car.
He knows he has to scrap his car when the five years are up. Those who choose to renew their rides by five years cannot extend them any more; those who pay the full PQP can go for further extensions after 10 years as long as the car is road-worthy.
Motor traders say the spurt in scrapping may continue, which would mean that the current constricted COE supply could ease up from as early as next year - as least for cars up to 1,600cc.
Mr Edmund Gin, the general manager of Mini agent Eurokars Habitat, said: 'I think there won't be a further cut in the quota for Category A (cars up to 1,600cc).'
He said this will help the industry, which has been hit by a double whammy of possibly the smallest supply of COEs in history and the gloomy economic outlook.
Mr Gin said: 'Last weekend was the worst we've seen in a month. The showrooms were all very, very quiet.'
christan@sph.com.sg
(14-09-2011, 07:45 AM)Musicwhiz Wrote: [ -> ]Will this piece of news affect VICOM negatively? Less cars on the road would imply less cars available for inspection....
(Vested)
Hmm...from the article, it seems that the reason for more vehicles headed for the scrapyard in this case is due to high PQP which is determined by high COEs. So would it be right to say that it's only the super old cars that are affected in this case?
But high COEs will also cause more people to hold their cars beyond 3 yrs (when inspection becomes mandatory) so probably not much impact in terms of vehicle inspection.
So, my guess is as long as COEs remain high, VICOM should be in a happy position.
(not vested)
Musicwhiz Wrote:Less cars on the road would imply less cars available for inspection....
Originally the LTA set COE quotas based on allowed growth without taking scrap rates into account. Unfortunately this resulted in higher than expected growth so the roads got very crowded. The LTA then switched to a formula of actual scrap rates + allowed growth. This was much lower than previous years and the COE supply dived, causing prices to spike. As a result the LTA is now using a hybrid formula to transition to actual scrap rates + allowed growth.
The current COE bidding system starts at $1 and moves upwards until you hit your reserve price or are successful. So as long as COEs sell for more than $1 it means all of them were sold.
What all this means is that for as long as COEs are not selling super cheap (like $1) then ALL the COEs are being bought AND used i.e. the car population continues to grow.
The more expensive the COE, the longer people will hang on to existing cars, increasing the age of the car population - and the frequency of inspections. Eventually the old cars are scrapped - and replaced with new cars (not necessarily by the same person). Over time the age profile of the car population will normalize.
However, should COEs decline significantly in price, many people will switch from mostly-new cars with expensive COEs to new cars with cheap COEs. This will delay the build-up of the old car population, until eventually the car population is mostly new cars. Then the age profile will normalize again.
In short, until COEs become super cheap and stay that way, the car population is still growing, which means that sooner or later they go for inspections - and pay VICOM.
Anyway, given that Setsco now accounts for 2/3 of revenues (and 50% of profits) while vehicle inspection is 1/3 of revenues (and the other 50% of profits), maybe investors should pay attention to Setsco too instead of focusing on vehicle inspections only.
d.o.g. do you see Setsco as being a more resilient business compared to car inspection?
For vehicle inspection & repair business in long term (10+ years) Electrical Vehicles would be the threat. What I understand EV requires 1/3 less repair and maintenance. For regular car Vicom does emission test which would not be applicable for EV.
Non-Vehicle testing has 25% operating margins vs vehicle inspection business which commands 46% ops margins. As Non-vehicle testing business grows faster than later business, overall company's margins and ROE would reduce.
Though non-vehicle inspection and testing business is based on regulatory requirements but most of it relates to infrastructure projects unlike regular inspection and testing. Hence I don't see why non-vehicle inspection and testing business would not be vulnerable to economical cycle. You might have noticed that from 2008 to 2009, growth of non-vehicle business revenue and profit growth was almost flat.
However what I like is the most of business is within SIngapore hence less risk of foreign exchange impact. very few listed companies' revenue & profit comes solely from Singapore.
However company has started diversifying to overseas which would probably drive the growth in the business but it would also increase the volatility.
As we all know that past sucess doesn't guarantee future success. So looks like days are gone for Vicom for stable and consistent growth and it has to embrace for volatility in its revenue/profits subject to economy.