12-02-2014, 07:02 AM
(11-02-2014, 11:17 PM)felixleong Wrote: Vicom is a very good stock but the PE is way too high now
I think buying its parent comfort delgro would give investors more bang for their buck isnt it?
Using its latest FY13 EPS of ~0.32sgd and price of ~5.50sgd, P/E is around 17. Is it too much for a stock that has a CAGR of 28% since 2004, or CAGR of 15% since 2009? Note that its cash and EPS has been on an upward trend for the last 9 years (or even longer).
My general feeling is, yes, Vicom is NOT cheap but Mr Market has not gotten insane enough to value it to grow 'into the sky'.
Looking at FY2012 financials for CDG and Vicom, Vicom's profits is ~10% of CDG. This means a 10% increase in Vicom's profits will only increase CDG's by 1%, not too sensitive IMHO. Without accounting for the other parts of CDG's businesses (especially paid fare) - cab, rail and buses, and also the potential upcoming risks (increased costs in DTL1/2/3 startup), it will take some hard work to calculate out a potential arbitrage situation..