Friday, January 19, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of SMRT Corp

Value Investment on Singapore Stock Exchange - Valuation Report of SMRT Corp

Evaluated on 19-Jan-2007 and I am currently invested in this company.

About the company:

  1. Core Business: Public transport - provision of train, bus and taxi services.
  2. Date of Listing: Jul-2000
  3. What I like about this company: Its has got a stable earning basis, being a public transport service provider. Revenue and Net Asset Value improving throughout last 5 years. Profit and Earnings Per Share improved in 2002-2005, but there was a dip in 2006, likely due to increase in oil prices.
  4. What I do not like about this company: About 77% of its total assets is vested in Property, plant and equipment. I am not too comfortable with its bond issuing activities, because I do not understand the bond issuing concept. Probably need to re-visit this again some time later...
  5. Competitive advantage (if any): Being 1 of the only 2 MRT operators, it sure has its advantage!

Valuation Statistics (base on 1H07 financial report)

  1. Earning Per Share: $0.078 (projected)
  2. Price/Earnings ratio : 17.82 (projected)
  3. Operating Profit: 19.80%
  4. Return on Equity Ratio: 10.16%
  5. Current Ratio: 0.68 (as mentioned in above, something I do not like)
  6. Debt/Total Equity Ratio: 1.37
  7. Net Tangible Assets: $0.384

Conclusion

  1. Price: $1.39 (18-Jan-07)
  2. Intrinsic Value: $0.77 (highly subjective)
  3. Maximum Price I would purchase at: $0.62 (highly subjective)
  4. Price to IV: 180%
  5. Final word: At a 180% price to IV ratio, it is too expensive for me to make a purchase! Thus, I would not consider buying this stock at this point. Having said that, this is one of those recession-proof stock, which I would love to hold, when it is less expensive.

Information sources

  1. SMRT Corp website at http://www.smrt.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.

3 comments:

Anonymous said...

Hi Mr Lim,

Got to know about your blog from Sunday Times.

Will be visiting this space regularly in future.

Cheers!

James Ong
http://kaokamoo.wordpress.com

Aragorn said...

Good Blog.

Fu Chin said...

Dear James, Aragorn,

Thanks for the kind compliments! :)

This blog will stay free for now... more like a social responsibility at the moment.

Warm regards,
Fu Chin