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

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