Tuesday, January 9, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Singapore Petroleum Company Limited

Value Investment on Singapore Stock Exchange - Valuation Report of Singapore Petroleum Company Limited

Evaluated on 09-Jan-2007 and I am currently invested in this company.

About the company:

  1. Core Business: SPC is a regional oil and gas exploration and production, refining, terminalling and distribution, marketing and trading of crude and refined petroleum products. It is an associated company of Keppel Oil & Gas Services Pte Ltd, a wholly-owned subsidiary of Keppel Corporation Limited.
  2. Date of Listing: Oct 1990
  3. What I like about this company: Firstly, more than 50% of its assets can be liquidated easily. Over the last 4 years, its revenue has been improving, although 2006 performance is unlikely to be as good as 2005, due to the flutuation in oil prices. It has got a competent management. It is also committed to expanding its Exploration and Production business.
  4. What I do not like about this company: Although it also has regional operations, but more than 90% of sales comes from Singapore based customers. I personally do not like it's high dependence on the flutuative nature of the oil prices.

Valuation Statistics (base on Sep-06 financial report)

  1. Earning Per Share: $0.558 (projected)
  2. PE ratio : 7.07 (projected)
  3. Operating Profit: 4.48% (projected)
  4. Return on Equity Ratio: 35.8
  5. Current Ratio: 1.39
  6. Debt/Total Equity Ratio: 0.88
  7. Net Tangible Assets: $2.95

Conclusion

  1. Price: $4.16 (09-Jan-07, PM)
  2. Intrinsic Value: $5.89 (highly subjective)
  3. Price to IV: 71%
  4. Final word: At a 71% price to IV ratio, I would consider purchasing it!

Information sources

  1. Singapore Petroleum Company website at http://www.spc.com.sg/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.

4 comments:

Anonymous said...

How do u derive the IV value of more than $5?

Lim Fu Chin said...

Hi there,

In essense, I look at the sum of its NAV and the EPS (x 5 years).

IV is probably not the most accurate term to use... I am considering to use another naming, any suggestion?

Please see the details of the valuation concept below:

http://valueinvestmentonsgx.blogspot.com/2007/01/value-investment-on-singapore-stock.html

Regards,
Fu Chin

Anonymous said...

How do you get Net tangible assets and forecast pe?

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